Oil surges to 10-month high

NEW YORK (CNNMoney.com) — Oil prices soared on Friday to their highest level since October as investors grow hopeful that a recovery of the world economy is in sight.

Light, sweet oil for October delivery rose 98 cents to settle at $73.98 a barrel — its highest closing price since Oct. 20, 2008, when crude prices settled at $74.25 on Oct. 20, 2008.

All told, oil has surged by two-thirds this year after closing out 2008 at $44.60 per barrel.

Manouchehr Takin, petroleum analyst at the Center for Global Energy Studies in London, said the increases in oil prices don’t make sense when you look at them purely at face value.

“On the fundamentals of supply and demand, one cannot explain why the price is high,” said Takin. “All the [global] inventories are full. The outlook for the demand for oil in the coming weeks is really weak.”

But investors who lack confidence in the volatile stock markets have shifted their money into commodities like oil, which is why prices have been escalating, said Takin.

“There is not much confidence in the stocks around the world,” he said. “Obviously commodities is an alternative. They trade in oil, and therefore the paper value goes up.”

CNN