Wall Street investment banker J.P. Morgan announced Tuesday  it is opening an office in Calgary.

The move came as oil prices continued to hover near an 18-month high, above $86 US a barrel.

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J.P. Morgan is setting up a location in Calgary as the price of oil sits at an 18-month high. ((CBC))

J.P. Morgan has hired David Harrison as head of Canadian energy investment banking. He will start June 1. Harrison was previously head of energy investment banking at UBS Securities Canada.

The announcement comes in the wake of the purchase for $500 million by U.S.-based Devon Energy of a 50 per cent stake in BP's Kirby oilsands interests in Alberta and Athabasca Oil Sands Corp.'s launch of an initial public offering that is the largest in Canada in years.

J.P. Morgan is the investment banking arm of JPMorgan Chase & Co., which has assets of $2.0 trillion US and operations in more than 60 countries. Its Calgary office will advise on takeovers and help oil companies raise capital.

In New York, benchmark crude for May delivery closed up 22 cents to $86.84 US a barrel on the New York Mercantile Exchange. The contract rose $1.75 to settle at $86.62 on Monday, the highest since October 2008.

Oil has jumped 24 per cent since early February.

Some analysts are skeptical it will stay at those levels.

"We think that the oil price increase is only of temporary nature, since it is driven by liquidity rather than by fundamental factors," said a report on commodities from Commerzbank in Frankfurt.

"The recent increase in correlation between oil prices and equity markets, which has now reached unprecedentedly high levels underscores our view."

With files from The Associated Press