NEW YORK — Oil prices surged Monday on a string of reports that point to improving economic growth in the United States and China.
Benchmark oil for December delivery rose $1.52 to settle at US$82.95 a barrel on the New York Mercantile Exchange.
Oil traders were more optimistic after two U.S. reports showed improvement in the manufacturing sector and in construction spending. Both came shortly after China said its manufacturing activity had improved.
The Institute for Supply Management reported Monday U.S. manufacturing activity expanded last month at the fastest pace since May. It credited an increase in new orders and exports.
Construction spending inched higher in September because of an increase in residential activity and government projects that helped offset weakness in commercial projects. Yet, it remained 34 per cent below the 2006 peak.
China said its purchasing managers index rose in October, a sign that the economy is on track for stable growth.
The reports were released ahead of two key developments that could affect oil markets: Tuesday’s mid-term elections in the U.S. and Wednesday’s decision from the Federal Reserve on stimulus programs.
Many analysts and traders think Fed policy-makers will announce a Treasury bond buying program to pump money into the economy. That could push down the dollar which, in turn, would help support oil prices.
Because oil and other commodities are priced in dollars, a weaker dollar means they become more attractive to buyers using foreign currencies.
In other energy trading on the Nymex, heating oil was up four cents to settle at US$2.2777 a gallon, gasoline gained 3.35 cents to $2.0929 a gallon and natural gas fell 20.6 cents to $3.832 per 1,000 cubic feet.
In London, Brent crude rose $1.47 to settle at US$84.62 a barrel on the ICE Futures exchange.
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