Oil prices rallied on both sides of the Atlantic on Thursday and ended at their highest levels in 25 months, as a weaker U.S. dollar prompted investors to buy riskier assets such as oil and other commodities.
Oil investors also took the cue from Wall Street, which cheered upbeat U.S. data on housing and retail sales, indicating the economic recovery was getting traction and boding well for future oil demand.
"The improved U.S. economic climate that has spurred this week's upside acceleration in equities is an important driver of higher oil values and we look for this pattern to be continued with (today's) release of the nonfarm payrolls number," said Jim Ritterbusch, president of independent consultants Ritterbusch & Associates in Galena, Ill.
U.S. crude for January delivery settled up $1.25, or 1.44 per cent, at $88 US a barrel, the highest since Oct. 8, 2008. Prices were up for a second day, with the two-day gain of 4.62 per cent, the highest since Oct. 2.
In London, ICE January Brent crude ended $1.82 higher, or 2.05 per cent, at $90.69, the highest since Oct. 1, 2008.
Both U.S. heating oil and gasoline futures rallied, supporting crude's rise. Heating oil rose amid colder temperatures in the U.S. Northeast, the biggest heating oil market. Gasoline gained on regional supply tightness in the key East Coast market.
January heating oil ended up 4.9 cents, or 2.04 per cent, at $2.4564, the highest since Oct. 8, 2008. January RBOB gasoline finished up 5.49 cents, or 2.39 per cent, at $2.3553.
