Oil Above $86, Near 18-Month High, After Rallying 24% Over Past 2 Months

(AP/The Canadian Press)

Oil prices hovered near 18-month highs above US$86 a barrel Tuesday as traders considered whether a recovering U.S. economy warranted further gains. By early afternoon in Europe, benchmark crude for May delivery was up four cents to $86.66 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.75 to settle at $86.62 on Monday, the highest since October 2008.

Oil has jumped 24% since early February. Crude had traded between $69 and $84 for about nine months before breaking out last week amid investor optimism that an improving U.S. economy will eventually boost crude demand. On Monday, reports showed strong improvements in demand at services businesses and in the housing market.

“We have a general sense that the economy is improving, and investors are now able to see a possible outlook for greater driving demand,” Cameron Hanover said in a report. “There may be a lull as we await this week’s supply and demand statistics.” Read more here.