Published On: Thu, May 7th, 2009

Oil closes at six-month high on economic optimism

Oil prices closed at a near six-month high on Thursday amid simmering hopes for an economic recovery that could lift ailing world energy demand.

U.S. crude rose 37 cents to $56.71 a barrel — the highest settlement since November 14 — after hitting a peak of $58.57 earlier in the session. London Brent crude rose 32 cents to $56.47 a barrel.

Oil prices have risen more than 10 percent in two weeks, lifted in part by mounting evidence that the global economic crisis is easing, paving the way for a rebound in world oil consumption.

“Crude futures are up as we see non-oil players — big funds — come in,” said Tom Knight, trader at Truman Arnold in Texarkana, Texas. “They view commodities as the asset class to go into as they feel that the economic recession has hit a bottom,” he said.

Encouraging the optimism, Labor Department data on Thursday showed the number of U.S. workers filing new claims for jobless aid unexpectedly fell by 34,000 last week.

Thursday’s gains were tempered, however, by losses in U.S. equities markets .N as investors took profits from hard-charging technology stocks and awaited U.S. government stress test results due after the market close that will detail the health of the banking sector.

Oil’s gains add to a rise of $2.50 on Wednesday, pegged in part to government data showing a smaller-than-expected increase in U.S. crude stockpiles.

Still, analysts say, inventory levels in consumer countries are abnormally high and could pose a risk to market bulls in the coming months.

U.S. crude stocks are running at their highest since 1990 as a slowdown in demand backs more barrels into storage.

Saudi Arabia, the world’s top oil supplier, said it would not raise supplies for the time being as it attempts to shore up prices.

The kingdom is pumping below 8 million barrels per day (bpd) and is unlikely to increase that production as world supply continues to outpace demand, Saudi Aramco Chief Executive Khalid al-Falih said on Wednesday.

OPEC producers have agreed to cut some 4.2 million barrels per day from the world market since September.