The price of oil has reached a new high for 2009, continuing its recent rise on the back of the weak US dollar and strong US company results.
US crude rose 52 cents to $79.05 a barrel in early trading, before slipping back to $78.78, up 25 cents on Friday’s close.
London Brent also traded higher, up 22 cents at $77.11 a barrel.
Oil prices surged last week, as encouraging US bank results fuelled optimism for the global economy.
Analysts said the short-term direction of the oil price would depend on the dollar and the next round of corporate results out this week.
“Oil prices are now trading at very high levels considering the fact that we’re still seeing very high stockpiles in the US,” said David Moore, a commodities analyst at the Commonwealth Bank of Australia.
“Crude may trade sideways today, getting direction from the US dollar and the equities market.”
The dollar lost more ground against the euro in early trading, falling to $1.4936.
“The spectacular gains were overwhelmingly driven by financials and market optimism rather than fundamentals,” according to analysts at the energy consultancy JBC Energy.
They believe the price of oil is more likely to drop back rather than move higher once fundamental factors re-establish themselves as the main driver of the oil price.
These factors include spare capacity, low profit margins for refiners, a “massive stock surplus” of products such as diesel and heating oil, and lacklustre demand among industrialised nations, JBC argued.
“We see no reason why prices should not return to the $65-$75 per barrel bandwidth.”
Source: BBC News