Oil prices rallied to a 10-month high near $75 a barrel on Monday, part of a broad global rally in commodities and equities markets propelled by expectations for an economic recovery.
U.S. crude rose 59 cents to $74.48 a barrel by 12:00 EDT after peaking at $74.81, the highest intraday price since October 21. Brent crude gained 16 cents to $74.35.
The gains came as world equities markets pushed firmly into positive territory on rising hopes for an economic rebound. Commodities markets have tracked stock indexes closely in recent months as dealers view equities as a lead indicator of economic performance.
Oil dealers said many investors were also using commodities as a hedge against the dollar, particularly oil as OPEC producers work to restrain supply.
Oil continues to ride a wave that is propelled by a fear of rising inflation and currency devaluation, OPEC members' unusually high level of compliance with production constraints, and a high level of oil importation into China, Mike Fitzpatrick, vice president at MF Global, said in a note.
A report Monday showed implied oil demand in China, the world's No. 2 energy consumer, rose in July for the fourth consecutive month as refiners ramped up activity.
Feeding hopes the recession was waning, reports Monday showed new industrial orders in the euro zone rebounded in June and U.S. economic activity improved again in July.
A string of positive economic data from various countries and rallying stock markets helped lift oil prices by 9.5 percent last week. Crude is up more than 65 percent in 2009 and may head higher still, according to analysts.
We could now easily move toward the $80 mark, if the growing enthusiasm about the budding economic recovery continues to dominate sentiment, said Edward Meir of MF Global.
Renewed tensions in Nigeria could also add support to oil prices. Nigeria's main rebel group said on Saturday it would resume attacks against Africa's biggest energy industry next month, overshadowing the surrender of hundreds of arms by rebels in a federal amnesty program.
(Additional reporting by Alex Lawler in London and Fayen Wwong in Perth; Editing by David Gregorio)