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Thursday 21st of January 2010
August 24, 2009    

Oil price hits 10-month high on back of economic recovery

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by Kay Murchie
Oil price hits 10-month high on back of economic recovery

US light crude hit $74.49 (£45) a barrel by afternoon in Europe today - after reaching $74.81, its highest intra-day price in ten months, on the back of increasing demand.

Meanwhile, London’s Brent crude was 16 cents higher to $74.35 a barrel.

This resulted in stock rising in BP, Royal Dutch Shell, BG Group and Cairn Energy, all adding between 0.3% and 1.3%.

So far this year, global oil prices have now increased more than 65% but are still way off their peak of $147 a barrel in July last year.

Oil analyst Edward Meir of MF Global said: “We could now easily move towards the $80 mark if the growing enthusiasm about the budding economic recovery continues to dominate sentiment.”

The surge in oil prices today came after the news that global economic recovery is gathering pace, which also sent shares higher in Asia and Europe today.

The FTSE 100 index soared to a ten-month high today and smashed through the 4,900 mark this afternoon, partly due to the Institute of Chartered Accountants’ index revealing that UK business confidence has surged, boosting hopes that the recession is coming to an end.

The survey, which questioned over 1,000 chartered accountants across England and Wales, showed that business confidence soared from minus 28.2 at the end of March to 4.8 at the end of June - the largest quarterly improvement since the survey commenced in 2003.

Meanwhile, the gains in Asian stock markets earlier today were spurred on by Federal Reserve chairman Ben Bernanke’s comments last Friday.

Mr Bernanke’s comments came at a speech in the annual central bankers’ retreat in Jackson Hole, Wyoming, and said the prospects for economic recovery “appear good”.

Japan’s main Nikkei 225 index closed up more than 3%, while Hong Kong’s Hang Seng rose 2% and markets in Thailand and South Korea gained 1.8%, Taiwan and Australia were higher by 2.8%, and India was up by 2%.

In other news today, there are tentative signs that the manufacturing sector in the euro zone may be emerging from recession after a rise in industrial orders has been reported for the month of June.

According to Eurostat, the European statistics agency, new orders (a key indicator of industry’s future growth) rose by 3.1% during the month when compared with May.

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