Oil prices approached $75 a barrel Monday for the first time in 10 months amid growing optimism that the world's economies are on the mend.
Benchmark crude for October delivery rose 73 cents to $74.62 a barrel on the New York Mercantile Exchange. Oil last topped $75 in October.
Natural gas rebounded strongly from new seven-year lows Monday, though prices remained well below $3 per 1,000 cubic feet.
Expectations that demand for energy will grow were spurred Friday by Federal Reserve Chairman Ben Bernanke, who said the U.S. economy is reviving. Bernanke's remarks and signs of improvement in the U.S. housing market sent stock markets higher, and that carried over into the new week.
Even before Bernanke spoke, however, prices had already begun to rise on a large and unexpected drawdown in U.S. oil supplies last week.
Equities appeared to follow energy prices, which took off midweek.
Asian and European markets were higher Monday, and the Dow Jones industrial average rose moderately in early trading.
This time, it appeared energy prices followed equities trading.
"No doubt about it, we're riding the wave of a strong stock market," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "These bullish financial developments have forced a huge amount of passive capital into commodities, especially the oil space."
It's been slightly more than a year since a barrel of crude soared close to $150 a barrel. No one expects another run to those heights anytime soon, but even the prospect of increasing demand is sure to keep upward pressure on oil prices.
In a report Monday, trader and analyst Stephen Schork said once oil gets to $75, "there is not a hell of a lot to prevent it from going to $80 or $85."
Natural gas is another story. Prices are at seven-year lows and supplies continue to grow. Friday marked the 11th session out of 12 trading days in which gas prices fell.
"Demand prospects are the worst they have been in recent memory," said PFGBest Research analyst Phil Flynn.
It has been a very moderate summer and meteorologists are forecasting the same through the fall. That could drive prices down even further if people don't need as much heat for their homes.
Gasoline prices have flattened and few expect a major run on prices as the driving season winds down.
Retail gas prices were almost unchanged overnight, falling to a new national average of $2.626 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 14.5 cents more expensive than it was a month ago, but it's $1.062 cheaper than last year.
In other Nymex trading, gasoline for September delivery added 265 cents to $2.0221 a gallon and heating oil for September delivery rose about 2 cents to $1.9246 a gallon. Natural gas for September delivery rose 7 cents to $2.875 per 1,000 cubic feet after tumbling 14.1 cents on Friday.
In London, Brent prices rose 21 cents to $74.40 a barrel on the ICE Futures exchange.