Oil prices rose 3% Monday to settle near a seven-month high of more than $68 a barrel. Renewed interest in the commodity has been sparked by improved factory activity in China, fortifying the belief that the economy is recovering from its recent doldrums.
Today, China’s Purchasing Manager’s Index reported that the country has expanded manufacturing for the third month in a row. Additional factors contributing to the increase in oil prices include the US dollar falling to a new five-month low and OPEC holding production steady at its most-recent meeting, as well as an improved economic outlook.
The start of the Atlantic hurricane season and the bankruptcy of American car manufacturer GM did not seem to dampen the market.
On the first day of June, US crude rose $2.27 to close at $68.58 on the New York Mercantile Exchange. With intra-day trading hitting a high of $68.68, this is the highest oil prices have reached since early November 2008. Additionally, London Brent crude closed at $67.97 a barrel, a increase of $2.45 for the day.
Also gaining momentum, natural gas traded nearly 10% higher Monday, with NYMEX Henry Hub futures closing at $4.20 per mmBtu, a rise of 37 cents. Natural gas remains at an historic low, with drilling efforts dropping and gas production curbed.
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