KUALA LUMPUR, Malaysia (AP) — Oil prices held gains above $81 a barrel Monday in Asia on renewed hopes that demand for crude will improve.
Benchmark oil for November delivery eased 2 cents to $81.56 a barrel at midday Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract gained $1.61 to settle at $81.58 on Friday, the first time it topped $80 a barrel since early August.
"We have expectations of demand growth returning to the market. The current momentum built into oil futures may support pricing at this $80 plus level for a while but it remains a question whether it can be sustained over the longer-term," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore.
A decline in first-time claims for jobless benefits and an improvement in Chicago region manufacturing activity spurred oil's rally on Friday. The U.S. government has also raised its estimate of second quarter gross domestic product growth to 1.7 percent from 1.6 percent.
At the same time, a surprise drop in commercial crude inventories of 500,000 barrels last week also boosted investor optimism.
Crude prices have zigzagged in the $70s for most of the last year, with short-lived peaks above $80 undermined by an uneven economic recovery in developed countries. Some analysts expect strong crude demand in emerging economies, such as China, will help push prices higher.
Shum said a weaker dollar and stronger Asian equity markets on Monday also underpinned the oil price.
Political unrest in OPEC nation Ecuador, sparked by dissident police protesting over a government proposal to cut their bonuses, also backed oil prices, he said.
In other Nymex trading in November contracts, heating oil rose was flat at $2.29 a gallon and gasoline gained 5 cents to $2.09 a gallon. Natural gas fell 4 cents to $3.76 per 1,000 cubic feet.
In London, Brent crude fell 1 cent to $83.74 a barrel on the ICE Futures exchange.