NEW YORK - Oil rose to near $60 a barrel yesterday as investors took heart from global stock market gains and more signs the U.S. recession is easing. Continued unrest in Nigeria's oil-rich south also supported prices.
Earlier in the same session, prices peaked at $60.48. On Monday, the contract jumped $2.69 to settle at $59.03.
Investors on Monday cheered a better-than-expected profit report from home improvement chain Lowe's Cos., an uptick in homebuilder sentiment and positive comments from analysts about U.S. banks, all of which suggested the U.S. economy is gradually emerging from a severe recession.
The Dow Jones industrial average jumped 2.9 percent.
Yesterday, stock indexes rose strongly in Asia and were generally up 1-2 percent in Europe.
While most analysts expect oil prices to increase over the next year as global economic growth recovers, some suspect the recent surge from below $35 a barrel in March may have gone too far, too fast.
"The move from $40 to $60 has happened faster than we thought it would," said Bob Doll, vice chairman of BlackRock, which manages $1.3 trillion in global assets. "But a year from now oil prices should be modestly higher than where we are today."
Rapid fall from historically high levels help free up cash
The jump in prices for gasoline and other oil products shouldn't choke off a fledgling recovery in consumer demand since the fall from $147 a barrel in July helped free up extra spending cash, Doll said.
"We've got our eye on it, but we're not overly concerned," he said. "Oil versus a year ago is still down a whole bunch."
Vienna's JBC Energy said the unrest in Nigeria, where the Movement for the Emancipation of the Niger Delta militant group threatened to cut off oil tankers' access to key export channels, was still a risk factor for oil prices.
"This would severely reduce the ability for companies to import or export crude oil and petroleum products," JBC said about Africa's biggest crude exporter.