“The economic recovery is going to spur further upwards movement in prices,” predicted John Kilduff, the senior vice president of energy at MF Global in New York. “There’s a lot of inherent strength in this market. It’s becoming clear that the recovery is for real and energy demand is going to pick up.”

With less than three weeks to go before the next OPEC meeting on September 9, crude is within a whisker of the $75 per barrel price that the Saudi King Abdullah has said would be “fair” to both producers and consumers. Oil prices have recovered from below $35 per barrel in December, rising 66 per cent so far this year. They had tumbled from a record $147 per barrel in July last year.

The latest rally has been stoked by a strong rise in sales of US homes last month to their fastest pace in nearly two years. An industry survey released on Friday showed that sales had risen for a fourth consecutive month, providing the strongest evidence yet that the housing sector is pulling out of a three-year slump.

“We are starting to see pretty good product demand, which is supporting prices,” Rick Mueller, a director of oil markets at Energy Security Analysis in Massachusetts, told Bloomberg.

But not everyone was convinced that the downside risk to oil prices had dissipated, as global demand for crude remained weak and stockpiles remained high. US crude inventories last week were still 15 per cent higher than a year earlier, and at least part of last week’s shrinkage was due to lower US imports.