Oil rallied to an eight-week peak above $82 a barrel yesterday, near its highest this year, buoyed by a weaker dollar and signs of an economic recovery in the United States, the top oil consumer.
Currency movements could set the direction for prices as demand strength may be unclear during the recovery, analysts said. Some predict the market could soon briefly revisit its 2010 high near $84 a barrel.
"We very well could retest the 2010 highs of $83.95," said MF Global analyst Edward Meir. "However, our belief is that should we get there, a rather substantial correction will set in, sending prices back into the mid-to high $70 range, as some of the long money comes off the table."
US crude was up 68 cents at $82.18 a barrel by 0855 GMT, after touching $82.41, the highest since $83.95 on January 11. Brent crude was up 70 cents at $80.59 after hitting $80.78, the highest since January 12.
The dollar index was down 0.29 per cent, making oil cheaper for holders of other currencies. European stocks gained for a seventh straight session, helped by easing investor concern about Greece's debts.
French President Nicolas Sarkozy promised Greece on Sunday that euro-zone countries would help it overcome its financial problems and vowed a crackdown on speculators who Athens blames for its woes.
New York crude oil rose more than one per cent on Friday, helped by a government report that showed the US lost fewer jobs than expected in February. Speculators have also been betting on rising prices.
Money managers extended their net long crude oil futures positions on the New York Mercantile Exchange in the week to March 2, the Commodity Futures Trading Commission said on Friday.
Oil was further supported yesterday by news that China will build two strategic oil reserve bases – a development expected to underpin demand in the world's second-largest consumer.
With global demand expected to revive in 2010, the Organisation of the Petroleum Exporting Countries (Opec) looks set to keep its production target unchanged when it meets on March 17, as it has for more than a year.
Oil is slightly above the $70 to $80 range that many in Opec have said they prefer.
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