Oil prices jumped above $75 a barrel Wednesday for the first time in a year on investor optimism crude demand will improve ahead of the Christmas shopping season.
A weak dollar was also bolstering crude prices.
Benchmark crude for November delivery was up 85 cents to $75 by midday European electronic trading on the New York Mercantile Exchange. The price reached $75.15 earlier in the day, the highest since October 2008.
The contract gained 88 cents to settle at $74.15 on Tuesday.
Oil has traded between $65 and $75 since May as traders have considered mixed crude supply and demand data.
Some analysts expect an increase in diesel fuel demand from U.S. truckers supplying inventory for the year-end holiday shopping season will trigger a sustained rise above $75 Others are more cautious, pointing to high inventory levels.
"We believe oil prices are poised to move higher," Goldman Sachs, which expects prices to rise to $85 a barrel by the end of the year, said in a report. "All indicators still point to a normal seasonal pick-up in shipping to retailers this year."
Trader and analyst Stephen Schork struck the same note. "The trend still favors the bulls," he said, in his Schork Report.
But burgeoning oil supplies this year have weighed on oil prices. Investors will be looking to the latest U.S. inventory data later on Wednesday and Thursday from the American Petroleum Institute and the Energy Information Administration.
"The problem is really that we have a lot of crude inventory," said Victor Shum, an analyst with consultancy Purvin & Gertz in Singapore. "This supply overhang makes the price vulnerable to any bad economic news, which we still get from time to time."
"It's more likely the price will hang around $70."
In other Nymex trading, heating oil and gasoline were both up by more than a penny at $1.94 and $1.85 a gallon. Natural gas for November delivery jumped 6 cents to $4.65 per 1,000 cubic feet.
In London, Brent crude rose 71 cents to $73.11 on the ICE Futures exchange.