Oil soars above $71 in Asia, hitting 2009 high

Oil prices soared above $71 a barrel in Asia, reaching a 2009 high, as investors poured money into the commodity as a hedge against a weakening US dollar and inflation.

Oil prices soared above $71 a barrel on Wednesday in Asia, reaching a 2009 high, as investors poured money into the commodity as a hedge against a weakening US dollar and inflation. Benchmark crude for July delivery was up $1.41 at $71.42 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.

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On Tuesday, it jumped $1.92 to close at $70.01.

Oil has jumped more than 100 per cent in three months as traders have cheered news showing the worst of a severe US recession is likely over, and have brushed off data, such as a 9.4 per cent 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 US 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.

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 2.11 cents to $1.99 a gallon and heating oil gained 2.58 cents to $1.83. Natural gas for July delivery was up 6.3 cents at $3.80 per 1,000 cubic feet.

In London, Brent prices gained $1.25 to $70.87 a barrel on the ICE Futures exchange.