NEW YORK (AP) -- Oil prices rose to two-year highs Monday, at above $92 a barrel, sparked by a weaker dollar and renewed optimism that a rebounding U.S. economy will lead an increase in the global demand for crude.
By early afternoon in Europe, benchmark oil for February delivery was up 84 cents to $92.22 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.54 to settle at $91.38 on Friday.
"The latest U.S. economic data have created optimism that economic activity is gaining momentum in ... the world's largest oil consumer," said a report from Commerzbank in Frankfurt.
Markets will be paying close attention to the U.S. non-farm payroll and unemployment figures for December, due Friday.
Oil traded in the $70 range for most of last year before jumping in December to above $92, a two-year high, on signs of strong crude demand in emerging economies such as China. Oil averaged $79.72 a barrel in 2010.
"Investors are looking for even higher prices down the road, clearly banking on the global growth story remaining intact," said Edward Meir of MF Global in New York.
Traders in recent years have also increasingly bought oil futures contracts as protection against inflation and a falling dollar. However, if higher crude prices themselves threaten to quicken inflation, hedging with oil becomes a self-fulfilling prophesy.
"Investors are using oil or other commodities futures or options to hedge against inflation, a weaker dollar, stronger precious metals prices or an economic recovery," Cameron Hanover said. "In 2010, investors just bought oil, knowing that buying would push prices higher and it seems likely to continue in 2011."
The dollar slipped against the euro and the British pound on Monday, helping boost crude prices by making the commodity cheaper for investors holding the European currencies.
The euro was up to $1.3348 from $1.3286 late Thursday in New York, while the British pound rose to $1.5494 from $1.5415.
In other Nymex trading in February contracts, heating oil gained 3.31 cents to $2.5755 a gallon and gasoline futures rose 2.31 cents to $2.4534 per gallon. February natural gas futures jumped 16.5 cents to $4.57 per 1,000 cubic feet.
In London, Brent crude rose $2.76 to $95.85 a barrel on the ICE Futures exchange.
Associated Press writer Alex Kennedy in Singapore contributed to this report.
By early afternoon in Europe, benchmark oil for February delivery was up 84 cents to $92.22 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.54 to settle at $91.38 on Friday.
"The latest U.S. economic data have created optimism that economic activity is gaining momentum in ... the world's largest oil consumer," said a report from Commerzbank in Frankfurt.
Markets will be paying close attention to the U.S. non-farm payroll and unemployment figures for December, due Friday.
Oil traded in the $70 range for most of last year before jumping in December to above $92, a two-year high, on signs of strong crude demand in emerging economies such as China. Oil averaged $79.72 a barrel in 2010.
"Investors are looking for even higher prices down the road, clearly banking on the global growth story remaining intact," said Edward Meir of MF Global in New York.
Traders in recent years have also increasingly bought oil futures contracts as protection against inflation and a falling dollar. However, if higher crude prices themselves threaten to quicken inflation, hedging with oil becomes a self-fulfilling prophesy.
"Investors are using oil or other commodities futures or options to hedge against inflation, a weaker dollar, stronger precious metals prices or an economic recovery," Cameron Hanover said. "In 2010, investors just bought oil, knowing that buying would push prices higher and it seems likely to continue in 2011."
The dollar slipped against the euro and the British pound on Monday, helping boost crude prices by making the commodity cheaper for investors holding the European currencies.
The euro was up to $1.3348 from $1.3286 late Thursday in New York, while the British pound rose to $1.5494 from $1.5415.
In other Nymex trading in February contracts, heating oil gained 3.31 cents to $2.5755 a gallon and gasoline futures rose 2.31 cents to $2.4534 per gallon. February natural gas futures jumped 16.5 cents to $4.57 per 1,000 cubic feet.
In London, Brent crude rose $2.76 to $95.85 a barrel on the ICE Futures exchange.
Associated Press writer Alex Kennedy in Singapore contributed to this report.