Oil prices rally further; Brent above $110

Oil prices extended their strong run higher Tuesday on a better outlook for the US economy, improved sentiment over the eurozone and concerns over potential tight crude supplies, analysts said. Brent North Sea crude for delivery in September jumped $2.18 to $111.73 a barrel in late London deals to record the first trade above $110 for nearly three months. New York's main contract, WTI for September, climbed $1.37 to $93.57. "There are several fundamental reasons behind this rally with the most recent bullish indicator being (last) Friday's US nonfarm payroll report," said Fawad Razaqzada, an analyst at trading group GFT Markets. "In addition we've seen bigger-than-expected inventory drawdowns in the US recently, implying that demand for oil remains strong. The euro's recent strength has provided additional support. Geopolitical concerns in the Middle East and hurricane season in the US have kept supply concerns elevated." Prices had already begun the week with strong gains on rumours of an attack on Syria's leader Bashar al-Assad and as a tropical storm looked likely to grow into a hurricane that could hit Gulf of Mexico oil operations. An improving US jobs sector and hopes that the European Central Bank may soon take action to relieve the eurozone debt crisis has also spurred buying. "Crude oil prices are extending their gains," Sucden Financial Research analyst Jack Pollard said Tuesday. "Whilst reports of continued unrest in the Middle East are being touted (for the gains), I feel this is mainly a case of ... the recent, broader shift in macro sentiment, namely regarding the eurozone."