Sterling makes strong gains on dollar and euro and analysts have warned that the rally is led by 'nuggets' of good news pertaining to the bullish sentiment that Britain may pull out of recession ahead of its European neighbors.
AA spokesman Luke Bosdet issued a warning by saying that there can be another summer of "petrol madness" ahead.
The price of oil leapt through $68 (£41) for a barrel of US light crude, a rise of $1.77 on the day, while Brent crude rose $1.94 to $67.46. Oil prices have nearly doubled from their low of less than $35 a barrel in February, although remain well below the all-time high of nearly $150 a barrel last summer.
Oil prices soared 30% in May – the biggest monthly gain since 1999. However, global oil demand remains weak because of the biggest global recession in decades and US stocks are near 19-year highs.
Analysts said the price was boosted by better news on factory output around the world, booming stockmarkets, and weakness in the dollar, in which oil is priced.
Tom Bentzm analyst at BNP Paribas Commodity Futuresm said: "Stockmarkets are rallying on improved global factory activity. The dollar is at another five-month low. All that is being translated into the idea that the worst of the recession is behind us."
Victor Shum, an energy -analyst at the -consultancy Purvin & Gertz in Singapore, said: "The market has focused on the few nuggets of positive data and ignored the supply and demand fundamentals."
Bosdet also said that speculators seem to have learned nothing from the last year and public finances will be propped up by the government to push up fuel duty.