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 fixed4.23%4.19%
15 yr fixed3.26%3.27%
5/1 ARM3.70%3.38%
30 yr refi4.22%4.18%
15 yr refi3.26%3.26%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,265.36 -14.38 -0.08%
Nasdaq 4,559.90 -19.89 -0.43%
S&P 500 2,004.91 -5.49 -0.27%
Treasuries 2.57 -0.01 -0.54%
Data as of 10:14am ET
Company Price Change % Change
Yahoo! Inc 39.92 -1.01 -2.47%
Bank of America Corp... 17.16 0.21 1.24%
Apple Inc 101.64 0.68 0.67%
EMC Corp 29.86 0.33 1.13%
Microsoft Corp 47.32 -0.20 -0.42%
Data as of 9:59am ET

Sections

European companies just can't get enough of their U.S. rivals: two German firms splash $25 billion in cash for drugs and energy companies. More

Gen Xers have higher salaries than their parents, but they have so much debt that they have a hard time saving, investing and buying homes. More

As Occupy Wall Street goes on its debt-abolishing tear, thousands of people across the country are begging them to forgive their loans. More

Market indexes 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. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.