LONDON – Oil prices rose for a fifth straight day of gains Monday, on the back of rising consumer confidence in the U.S. economy.
Benchmark oil for September delivery rose 5 cents to $96.06 per barrel in late morning European time in electronic trading on the New York Mercantile Exchange. The contract rose 41 cents to end at $96.01 per barrel on the Nymex on Friday.
The Thomson Reuters/University of Michigan preliminary August index of consumer sentiment released Friday showed its highest level since May. Most economists had been expecting a decline.
That combined with surprisingly strong retail sales and housing data raised hopes that the world's No. 1 economy is gaining traction.
Ric Spooner, chief market analyst at CMC Markets in Sydney, said the rally may be nearing the end of its course, as prices "are pushing into what many people would regard as the higher end of the neutral range for oil."
"The market is fairly well covered at the moment in terms of supply capacity," he said. "We are getting to a stage where the risk is starting to look to the downside."
On Friday, the price of Brent crude dropped on speculation that the Obama administration was considering a release of oil from its Strategic Petroleum Reserve to stem the rising cost of crude. Brent fell $1.56 to close Friday at $113.71 on the ICE Futures exchange. By midday in London, the price was up 61 cents to $114.33.
However, some analysts seemed to doubt that the market will see any concerted release of reserves. "It would appear that the US is having difficulty persuading other countries to do the same, however," said a report from the Commerzbank Commodity Research team. "Japan and South Korea, for instance, see no reason at present to release reserves. Even the IEA, which just a few weeks ago still regarded an oil price level of $100 as detrimental to the economy, has rejected the idea."
The U.S. released oil from its Strategic Petroleum Reserve last summer with only limited success. Oil prices dropped nearly 5 percent when the government announced the release of 30 million barrels from the SPR on July 23. Prices rebounded over the next eight days. Oil ended the year higher than it started.
In other energy trading on the Nymex, heating oil rose 1 cent to $3.11 per gallon. Natural gas fell 3 cents to $2.69 per 1,000 cubic feet.