Oil Prices set to Rise

Oil prices rose sharply this evening, with US crude hitting a six-month high above $60 a barrel as the US currency tumbled.

US crude jumped to $60.08 a barrel, its highest point since mid-November, before slipping back to $58.62, up 12 cents from Monday's close. Brent North Sea crude added 10 cents to $57.58.

The gains came as the euro soared above $1.37, its highest level for one and a half months. A weak dollar stimulates demand for dollar-priced crude because it becomes cheaper for buyers using stronger currencies.

Many market watchers believe the dollar is likely to decline against most rival currencies in the coming months as risk aversion recedes on hopes that the worst of the global slump is over.

But some analysts expect the rally in oil prices to weaken as the ailing global economy will keep demand down.

The global downturn has pushed oil down from a record high above $147 a barrel hit last July to a low in December of $32.40. US crude is up more than 80% from a January low of $32.70 a barrel.

Crude oil demand in China, the world's second-largest energy user, provided support for prices with Chinese customs confirming today that crude imports in April rose to reach the second-highest daily rate on record.

(source: http://www.rte.ie/business/2009/0512/oil.html)