Oil surges to 3-month high

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- Oil prices surged past the $80-a-barrel mark Monday to their highest level in nearly three months, as investors regained confidence in the pace of the global economic recovery.

What prices are doing: Crude oil futures for September delivery settled up $2.39, or 3%, at $81.34 a barrel. That marked the highest level since May 4, when oil prices settled at $82.47 a barrel.

Crude prices have bounced back nearly 20% from this year's low of $68.01 a barrel, hit on May 20.

What's moving the market: A renewed appetite for risk pushed stocks higher and pressured the dollar following upbeat economic reports and strong earnings from European banks.

Oil, like other commodities, is priced in dollars, and a weaker greenback boosts prices.

The Institute for Supply Management (ISM) said Monday its manufacturing activity index edged lower to 55.5 in June, a smaller decline than the drop to 54.2 economists surveyed by Briefing.com had expected. But any reading above 50 indicates expansion, which helpe lift investor optimism.

Investors also cheered a government report on construction, which showed that spending rose 0.1% in June. Economists had forecast spending to edge lower.

What analysts are saying: "Oil is running on all cylinders today," said James Cordier, president of Liberty Trading Group. "There's a whole lot of enthusiasm about the global economy, so risk is back on the table and doing quite well."

During May, June and July, oil prices were range-bound between $70 and $80 a barrel as the European economy was slowing, the U.S. economy was muddling along and the Chinese government was trying to slow growth in the region.

"Now there are two significant changes in that story," he said. "Austerity plans are in place in Europe, and the region's banks aren't as dire as what the market had perceived. And China has successfully slowed its economy, so worries about a crash landing have faded."

Cordier said the low-$80 a barrel range will be sustainable, but the sluggishness of the U.S. economy will curb prices from moving higher.

"The U.S. economy is the final catalyst to get oil to breakthrough to the next level, but we're just not there yet," he said. "There are still fears of a double-dip recession and high inflation." To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.98%4.08%
15 yr fixed3.09%3.11%
5/1 ARM3.20%3.22%
30 yr refi4.06%4.16%
15 yr refi3.17%3.20%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,810.06 91.06 0.51%
Nasdaq 4,712.97 11.10 0.24%
S&P 500 2,063.50 10.75 0.52%
Treasuries 2.32 -0.02 -0.86%
Data as of 1:50pm ET
Company Price Change % Change
Bank of America Corp... 17.12 0.12 0.71%
Kinder Morgan Inc 39.75 -0.17 -0.43%
Apple Inc 116.47 0.16 0.14%
Intel Corp 35.59 -0.36 -1.00%
Microsoft Corp 47.98 -0.72 -1.48%
Data as of Nov 21

Sections

This arrangement, announced Friday, illustrates how the lines have blurred between traditional TV networks and newfangled options like Netflix. More

The Obama administration is touting that its immigration action will boost wages. But the hike amounts to only $170 a year by 2024. More

Obama doesn't have the authority to create a startup visa, but part of his reform announcement could include a workaround for entrepreneurs: 'parole status.' More

Nearly half of all Americans say there's a chance they'll have to work during a holiday between Thanksgiving and New Year's, according to a new poll. And one in four say they'll have to work whether they want to or not. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.