LONDON – Oil rose towards $74 a barrel on Friday, moving back within sight of record highs, on a positive outlook for oil demand and economic growth in top consumer the United States.
American drivers are expected to take to the roads in record numbers over the U.S. July 4 holiday weekend, despite high fuel prices. The U.S. economy grew at the fastest rate in 2-1/2 years in the first quarter.
"All the growth numbers have been coming through stronger than expected," said Kevin Norrish, an oil analyst at Barclays Capital. "That's very much reflected in the oil demand as well."
U.S. crude was up 33 cents at $73.85 a barrel at 1558 GMT. London Brent crude was up 23 cents at $73.11.
Metals and other commodities also rallied as investors' fears over interest rate rises and a possible weakening of the U.S. economy receded. Copper jumped almost 4 percent in London and gold rose.
"It's money coming back in to all capital markets, after fears the Fed could put the economy into recession," said John Brady of ABN AMRO in New York.
"We expect to see new money flooding in at the start of the third quarter — seasonally the strongest of the year."
U.S. crude has risen from $20 in January 2002 and hit a record high of $75.35 in April as rising demand strained supplies and investors poured money into commodities.
Prices were drawing strength on Friday from the continued closure of a key shipping channel in Louisiana, which has limited output at three refineries at a time of peak summer gasoline demand.
A Citgo Petroleum Corp. spokesman said the rest of the Calcasieu Ship Channel, part of which resumed operations this week, may reopen to tug and barge traffic later on Friday if four vessel test runs go well.
Underlining supply concerns caused by recent refinery glitches, U.S. inventories of gasoline fell by 1 million barrels last week, while crude stocks declined 3.4 million barrels.
Iran's row with the West over its nuclear work, which traders fear could cut supplies from the world's fourth-largest oil exporter, has also supported prices this year.
The Group of Eight industrialised nations told Iran on Thursday to give a "clear and substantive response" next week to an offer by major powers over its nuclear plans. Tehran said that was unlikely.