Oil prices hit highest level in 2 weeks, near $80

NEW YORK (CNNMoney.com) -- Oil prices continue to swing in the mid- to upper-$70s this week as investors digest the first wave of quarterly corporate results, and mixed economic and supply data.

A strong outlook for global crude demand pushed prices up 3% Tuesday, and oil continued to climb slightly higher Wednesday following a better-than-expected weekly government inventory report.

Prices have been trading between $70 and $80 a barrel since May. Last week, they posted their biggest weekly gain since May, jumping 5.5% to hit $76.09.

But on Monday prices retreated ahead of the start of earnings season and the release of a slew of economic reports. However, prices spiked again on Tuesday and Wednesday, pushing them to two-week highs.

"We had a big move on Tuesday thanks to genuine improvement in confidence in the prospect for a sustainable economic recovery," said Chris Lafakis, associated economist at Moody's Economy.com.

Much of the gain Wednesday was attributed to strong Energy Information Administration's supply data.

Crude oil stocks declined by 5.1 million barrels, while analysts expected them to drop by 2.6 million barrels, according to a consensus estimate collected by energy information provider Platts.

But supplies increased more than expected in two other categories. Gasoline inventories jumped by 1.6 million barrels, above analysts' expectations of a 950,000 barrel rise, and distillates, used to make heating oil and diesel, rose by 2.9 million barrels.

Analysts expected inventories to climb by a modest 800,000 barrels, but economists shrugged of the weakness, saying it was likely due to the post-holiday decline in traveling.

Lafakis said what while the inventory report presents varying data, it is mostly supportive of higher prices thanks to strong demand from refineries and a weak pace in crude imports.

He expects crude prices to average $80 a barrel in the second half of 2010, and gradually scale up to $89 a barrel by the end of 2011.