Oil price trading up near $74 expect $85 by year end

Oil prices rose higher to near $74 a barrel Tuesday trading as investors eyed a still weakening US dollar and looked to oil and gold commodities for protection against possible inflation.

Benchmark light crude oil futures for November delivery was up 52 cents at $73.79 by late afternoon Singapore time in electronic trading on the NYMEX. The contract gained $1.50 to settle at $73.27 on Monday amid expectations of stronger demand during the US winter.

Crude oil prices have traded between $65 and $75 for months as traders mull signs of an uneven economic recovery and consumer demand. The dollar has slid over the last month on concern that massive stimulus spending designed to spark economic growth will eventually trigger inflation.

“We expect commodity prices to be heading north over the next 12 months as a hedge against inflation,” said Melvyn Boey, deputy director of Asian equity research for Bank of America Merrill Lynch. “That includes oil and gold, down to soft commodities such as palm.”

Crude oil prices will likely rise to $85 a barrel by the end of the year and to $95 by the end of 2010, Goldman Sachs said in a report.

Tags:  oil price, oil trading