Spurred by increased risk appetite for both global equities and commodities ahead of the weekend, crude futures soared above $81 on the New York Mercantile Exchange as oil traders continued to bet on the expectation that the recovering world economy will soon lift petroleum demand.
Rocketing to a seven-week high Friday, the price of light, sweet crude oil for April delivery gained more than $1 to close in bullish territory at $81.50 a barrel. Likewise, NYMEX gasoline futures traded higher to $2.27 a gallon.
Bill O'Grady, the chief markets strategist at St. Louis-based Confluence Investment Management LLC, believes the recent drive up in oil prices is partly due to the steady improvement in the global economy.
"As the economy improves, it lifts hopes for future demand, and that is what is supporting the market," O'Grady contended.
The analyst pointed to improving U.S. economic data, as well as continued growth in China, as main impetuses for the market's rosy outlook on near term demand in spite of additional builds in both crude oil and gasoline inventories.
Today, markets rallied on the U.S. Labor Department's report spotlighting a gain of 1,000 manufacturing jobs for the month of February. By midday, the Dow, S&P and Nasdaq indexes booked positive gains on the session, while oil rose to an intra-day high of more than $82 a barrel.
On the opposite side of the energy coin, natural gas spot prices at the Henry Hub also posted a positive gain to $4.59 Mcf at the close of its session. Despite rallying alongside the oil complex today, natural gas remains an independent player on the domestic energy front.
"While an improving economy does help the market, natural gas is marching to its own fundamentals," O'Grady noted. "We are treating natural gas as a long-term, range-bound market with a downside near $3 and an upside of $6 Mcf."
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