Oil reaches 2009 high above $75

Signs of economic recovery have boosted oil prices

Oil prices continued a five-day rally on Wednesday, setting a new high for the year above $75 a barrel.

US light, sweet crude peaked at $75.17 a barrel, before falling back to $74.98 later in the session.

Smaller declines in Chinese imports and exports were taken as signs of recovery in the global economy and an indication Chinese stimulus measures are working.

The weakening US dollar also boosted oil because it made the commodity cheaper to buy with other currencies.

The dollar fell to its lowest rate against the euro since August 2008 on Wednesday, with a euro worth $1.49.

Some analysts are predicting that the euro could pass $1.50 in the next few weeks.

'Reversals can be sharp'

"There's a lot of positive sentiment right now, but that's largely driven by the softer dollar," said Mark Pervan, commodity strategist at ANZ Bank in Melbourne.

"Whether the rally is sustainable depends on further dollar weakness."

But there were warnings that a dollar-led rally could be reversed quickly.

"Reversals can be sharp when and if the dollar stops to fall off the cliff," said Olivier Jakob, analyst at Petromatrix.

Also supporting the oil price is predicted cold weather in the US, with the National Weather Service forecasting unusually high demand for heating this week.