Oil price hits seven-month peak above 68 dollars

LONDON ( 2009-06-01 17:58:49 ) :Crude oil prices soared on Monday, rising above 68 dollars a barrel for the first time for seven months, boosted by higher Chinese output, a weak US currency and rising equity markets, traders said.New York's main futures contract, light sweet crude for July delivery, struck 68.29 dollars -- a level last reached on October 30.Brent North Sea crude for delivery in July bounced as high as 67.69 dollars a barrel."Crude oil is higher... especially after news that the manufacturing sector in China expanded for a third month," said BetOnMarkets analyst Dave Evans."China, the world's second-biggest energy consumer, has been showing signs of a recovery over the last two months. There is a very strong chance of oil prices testing the 70-dollar level."In later trading on Monday, New York crude changed hands at 68 dollars a barrel, up 1.69 dollars from Friday's close. Brent oil was 1.75 dollars higher at 67.27.China's manufacturing activity expanded in May for the third month running, official data showed on Monday, the latest tentative sign of economic recovery.The official Purchasing Managers' Index, or PMI, for the manufacturing sector pulled back slightly to 53.1 in May, down from 53.5 in April, the China Federation of Logistics and Purchasing said in a statement on its website.A reading above 50 means the sector is expanding, while a reading below 50 indicates an overall decline.The euro jumped above 1.42 dollars for the first time this year, as rebounding global stock markets persuaded investors to switch away from the safe-haven US currency, dealers said."A continuing weaker US dollar seems to drive significant buying power," added ODL Securities anlayst Marius Paun. A weak US currency makes dollar-priced oil cheaper for holders of stronger currencies and, in turn, tends to stimulate demand and push prices higher.In late morning trading heranies were also boosted by higher commodity prices.Despite recent gains, oil prices remain far below the record peaks of above 147 dollars a barrel forged in July 2008. A global economic downturn has since slashed the world's appetite for energy.