Crude Oil Trades Above $73 on Signs of Global Economic Recovery

Dec. 21 (Bloomberg) -- Crude oil traded above $73 a barrel in New York after rising last week amid optimism that global demand will increase as the world economy recovers from its worst recession since World War II.

Oil prices may rise this week on expectations that increasing U.S. fuel demand will reduce inventories, according to a Bloomberg News survey. Reports this week are forecast to show increasing sales of existing homes and new homes in the U.S.

“If the sentiment around demand recovery continues to improve I’d see upward support for oil prices,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said today. “But an oversupply problem overshadows the market, and it’s hard to see oil pushing much higher.”

Crude oil for January delivery was at $73.53 a barrel, up 17 cents, in after-hours electronic trading on the New York Mercantile Exchange at 8:59 a.m. Singapore time. It fell as low as $72.95 a barrel.

The contract, which expires today, rose 1 percent to $73.36 on Dec. 18, the highest settlement since Dec. 7. Futures climbed 5 percent last week, the most in two months, and are up about 65 percent this year.

Prices had jumped as much as 2 percent after Iranian troops occupied an oil field in southern Iraq. Crude declined after Iranian troops left a disputed region of its border with Iraq. Iranian troops withdrew from the al-Fakah well in the East Maysan field late Dec. 19, Iraq’s deputy minister of oil Abdul Kareem al-Luaibi told reporters in Baghdad yesterday. The issue was resolved diplomatically, he said.

OPEC Meeting

Oil for February delivery, the more actively traded contract, climbed as much as 45 cents, or 0.6 percent, to $74.87 a barrel. It rose 0.5 percent on Dec. 18.

OPEC won’t reconsider or review oil quotas at this week’s meeting of the Organization of Petroleum Exporting Countries in Luanda, Angola, Iraq’s Oil Minister Hussain al-Shahristani said.

Iraq is calling for stricter compliance with OPEC quotas, al-Shahristani said in an interview yesterday.

Brent crude oil for February settlement rose as much as 57 cents, or 0.8 percent, to $74.32 a barrel on the London-based ICE Futures Europe exchange. It gained 0.5 percent to $73.75 on Dec. 18.

Hedge-fund managers and other large speculators reduced their bets on rising oil prices to a two-month low, according to U.S. Commodity Futures Trading Commission data.

Speculative net-long positions, the difference between orders to buy and sell the commodity, fell 22 percent to 53,192 contracts on the New York exchange in the week ended Dec. 15, the commission said in its weekly report.