Oil prices at highest level in nearly 18 months

NEW YORK (CNNMoney.com) -- Oil prices rose on Tuesday as investors continued to pour money into crude with the hope that global demand will strengthen.

What prices are doing: Crude prices for May delivery inched 22 cents higher to settle at $86.84 a barrel.

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Prices are up about 5% since last week and over 70% since April 2009. That's their highest level since Oct. 8, 2008, when crude settled at $88.95.

What's moving the market: Oil prices have been trading higher for the past few trading sessions, as recent economic reports in the U.S. and the U.K. have indicated that a global economic recovery is underway.

Last week the Labor Department said the U.S. added jobs in March, and manufacturing grew at the fastest since 2004. Also, the U.K. government reported better-than-expected manufacturing data and higher economic growth in the fourth quarter.

What analysts are saying: "There's still euphoria in the market," said Gianna Bern, president of Brookshire Advisory and Research. "A combination of positive job news and the fed [low rates policy] are lending themselves to the major uptick we're seeing."

Crude has been trading higher despite strengthening in the U.S. dollar. Typically, a stronger dollar makes oil more expensive for foreign investors and tends to put downward pressure on oil prices. But traders are investing based on a hopeful outlook for global demand.

"Crude oil surged past our pivot range to trade in unknown territory," says a report out today by The Schork Group, "above here the sky's the limit."

Still many analysts are cautious about the run-up in crude, since meaningful jobs growth and demand are scant.

"I'm still concerned about fundamentals. There's still a lot of supply out there," said Bern. "Crude prices are fairly generous. I don't think that this is sustainable."

Looking ahead: Traders will keep an eye on the weekly initial claims and crude inventory reports due out later in the week. Any reverse in last week's upbeat data could send crude prices lower.

"We still have to keep initial claims on our radar," said Bern. "That data could come back to bite the market at the end of the week."

The Federal Reserve board expressed concern on Tuesday about the sustainability of the recovery without meaningful jobs growth and improvement in the housing market.