World oil prices rose on Tuesday, approaching recent two-year peaks, with traders taking their direction from the weakening dollar, analysts said.
Brent North Sea crude for delivery in February advanced by 72 cents to 95.56 dollars a barrel in London trade.
New York’s main contract, light sweet crude for February added 40 cents to 91.95 dollars per barrel.
“Today’s trading sees oil prices slightly firmer, as the dollar is slightly weaker,” said analyst Brenda Sullivan at the Sucden Financial Research brokerage in London.
The faltering greenback makes dollar-priced oil cheaper for buyers using stronger currencies. In turn, that tends to stimulate demand and prices.
Crude futures had surged to two-year high levels on Monday amid confidence in increased global demand after the US economy showed more signs of recovery.
New York crude had soared as high as 92.58 dollars and London Brent oil struck 96.17 dollars per barrel. Those were the best levels since October 2008.
The Institute for Supply Management reported on Monday that US manufacturing activity grew for the 17th straight month in December, bolstering confidence that the US economic recovery was gaining momentum.
And the Commerce Department reported construction spending rose by 0.4 percent in November to reach its highest point in five months. The United States is the world’s biggest oil-consuming nation.
“This adds to a sense of optimism about the accelerating US economy,” said Victor Shum, senior principal for Purvin and Gertz international energy consultants in Singapore.
Traders were also heartened by data released by China on Saturday showing manufacturing growth eased last month, suggesting Beijing’s attempts to cool the soaring economy could be working.
Meanwhile, investors were looking ahead to Wednesday’s weekly snapshot of American energy inventories, as well as a raft of key data in Europe and the United States later in the week.
Trading will be “influenced by tomorrow’s eurozone new orders data, Thursday’s eurozone retail sales and especially by Friday’s nonfarm payrolls and Federal Reserve Chairman Ben Bernanke’s testimony”, added Sullivan.