Oil jumps above $70 on optimism demand to recover

LONDON — Oil prices leapt above $71 a barrel Monday on mounting investor hopes that a recovering global economy will boost crude demand.

Benchmark crude for September delivery was up $1.86 to $71.31 a barrel by late morning London time in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose $2.51 to settle at $69.45.

Oil prices seesawed last week before surging Thursday and Friday as investors bet that crude demand, which has been tepid this summer, will eventually pick up as the economy improves.

That optimism was fueled by strong manufacturing surveys around the world, which provided a clear hint that the worst of the global recession was over and that growth could be just round the corner. A survey into the U.S. manufacturing sector later is also expected to show that the pace of the contraction has continued to moderate.

If manufacturing recovers around the world, then demand for oil will increase.

Mohammad Ali Khatibi, Iran’s governor to the Organization of Petroleum Exporting Countries, said Sunday he expects crude prices to reach $80 a barrel by January, the oil ministry said.

In other Nymex trading, gasoline for August delivery rose 2.93 cents to $2.04 a gallon and heating oil gained 3.23 cents to $1.86. Natural gas for August delivery rose 0.6 cents to $3.71 per 1,000 cubic feet.

In London, Brent prices rose $1.76 to $73.26 a barrel on the ICE Futures exchange.