Oil traded at the highest in 26 months in New York on speculation that fuel demand will increase amid signs the economic recovery is gathering pace in the US, the world's biggest crude-consuming nation.
Oil rose as much as 0.5 per cent after a report showed US service industries expanded in November at the fastest pace in six months. The Institute for Supply Management's non-manufacturing index, which covers about 90 per cent of the economy, increased to 55 last month from 54.3 in October. A reading higher than 50 signals growth.
“It's meant to be a manufacturing led recovery, and we're meant to really see the affects of that come through,” said Jonathan Barratt, managing director of Commodity Broking Services in Sydney. “We've been running with this explosive move since Wednesday. We're right at the top end of the range.”
The January contract was at $US89.37 a barrel, up 18 cents, in electronic trading on the New York Mercantile Exchange at 12:56 p.m. Sydney time. It rose as much as 41 cents to $US89.60 earlier, the highest intraday price since Oct. 9, 2008. Oil has climbed 12.6 per cent this year.
Oil will advance to $US120 a barrel before the end of 2012 as consumption grows in emerging economies, according to a Dec. 3 report from JPMorgan Chase. Futures will average $US93 a barrel next year, up from a previous estimate of $US89.75, the bank's analysts forecast.
Brent crude for January settlement gained as much as 33 cents, or 0.4 per cent, to $US91.75 a barrel on the ICE Futures Europe exchange in London. The contract climbed 73 cents, or 0.8 per cent, to $US91.42 a barrel on Dec. 3.