Oil prices drifted below $67 a barrel today in Asia but mostly held onto gains made overnight amid signs of an improving US economy.
Benchmark crude for September delivery was down 31 cents to $66.85 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. Yesterday, the contract added $1.76 to settle at $67.16.
Evidence that the recession-hit US economy is strengthening has bolstered investor optimism and triggered a rally from $58.78 a barrel two weeks ago. While crude demand hasn't rebounded yet, traders have begun to have more faith that consumption will eventually pick up.
"We haven't seen demand increase yet, but all the good news about the economy seems to be adding fuel to the fire," said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney. "Just the fact that things are improving is enough to change the sentiment of a lot of people."
Investors were cheered by a National Association of Realtors report yesterday that said sales of previously occupied homes rose for the third month in a row. The last time that happened was in the middle of the housing boom in early 2004.
The Dow Jones industrial average rose 2.1 per cent yesterday to above 9,000 for the first time since January. The Dow is up 11 per cent in the last nine days.