Oil price up sharply on US growth

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The price of oil has risen sharply after figures showed the US economy had returned to growth, its first expansion for more than a year.

The price of US light crude rose back above $80 a barrel, to $80.08, up $2.62, or 3.4%. The price of London Brent also climbed, to $78.24.

The US economy grew at an annual pace of 3.5% between July and September, indicating the recession has ended.

This boosted hopes that demand for oil would now begin to increase.

The return to growth of the world's largest economy also sent shares on Wall Street sharply higher. The main Dow Jones Index climbed 193 points, or 2%, to 9,955.78.

Price concerns

"Oil futures are up sharply on the GDP data, on optimism that economic conditions will improve and raise demand for petroleum products," said Andy Lebow at MF Global.

Oil prices have more than doubled since the start of the year, but are still well below the high of $147 reached in July 2008.

But there are concerns that sentiment, rather than fundamentals, is driving the oil price, and that once these fundamentals re-establish themselves, the price may fall.

These include spare capacity, stock piles of oil and continued weak demand among industrialised nations.