SINGAPORE – Oil prices closed in on $71 a barrel Wednesday in Asia, reaching a 2009 high, as investors poured money into the commodity as a hedge against a weakening U.S. dollar and inflation.
Benchmark crude for July delivery was up 70 cents at $70.71 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. On Tuesday, it jumped $1.92 to close at $70.01.
Oil has jumped more than 100 percent in three months as traders have cheered news showing the worst of a severe U.S. recession is likely over, and have brushed off data — such as a 9.4 percent unemployment rate in May — that suggest crude demand will remain weak.
"I wouldn't be surprised if we're testing $80 in a week or two," said Gerard Rigby, energy analyst with Fuel First Consulting in Sydney. "The momentum right now is too strong."
A weaker U.S. dollar and expectations massive fiscal stimulus spending could spark inflation have also bolstered prices. The euro was steady at $1.4073.
The Energy Department's Energy Information Administration said Tuesday that crude prices will likely average $67 a barrel in the second half of 2009, about $16 higher than the first six months of the year. A month ago, the EIA's price-per-barrel forecast for the second half of 2009 was $55.
The Energy Department also said global consumption of oil, which has fallen by nearly 2 million barrels per day this year, will begin to rebound in 2010 as the economy recovers.
Wednesday's release of petroleum inventory data from the EIA could provide additional insight about crude demand. Analysts expect a rise of 800,000 barrels.
In other Nymex trading, gasoline for July delivery rose 1.34 cents to $1.98 a gallon and heating oil gained 1.15 cents to $1.82. Natural gas for July delivery was up 6.8 cents at $3.80 per 1,000 cubic feet.
In London, Brent prices gained 53 cents to $70.15 a barrel on the ICE Futures exchange.