Oil prices bounce back above 58 dollars | business | Hindustan Times
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Oil prices bounce back above 58 dollars

business Updated: May 08, 2009 21:54 IST

World oil prices rallied on Friday, briefly breaching 58 dollars per barrel again, buoyed by better-than-expected jobs data in key energy consumer the United States, traders said.

New York's main futures contract, light sweet crude for delivery in June, rose 89 cents to 57.60 dollars a barrel, after earlier hitting an intra-day peak of 58.45.

Brent North Sea crude for June delivery climbed 81 cents to 57.28 dollars a barrel, having already struck 58.11.

This week, oil has also won support from rising stock markets amid increasing signs of economic recovery in the recession-hit United States, traders said.

"Oil prices... have continued higher amid increased hopes for economic recovery, which might pave the way for a rebound in oil consumption," said Sucden analyst Nimit Khamar.

Crude oil was boosted Friday after official data showed that US labour market losses eased in April with 539,000 jobs axed, while the unemployment rate hit 8.9 percent, suggesting the economy may be stabilising.

The jobless rate hit its highest level since September 1983 but the pace of job losses slowed appreciably, offering another possible sign of an easing of the severe economic slump.

The number of job losses was not nearly as bad as the consensus Wall Street estimate of 600,000 in the Labor Department monthly payrolls report, one of the best indicators of economic momentum.

Oil prices had also soared Thursday to near six-month high points above 58 dollars before falling back in late trade as investors banked profits.

Prices have posted solid gains this week on hopes of a recovery in energy demand, but they remain far below last July's record peaks above 147 dollars a barrel.

"Oil prices have been surging this week on titbits of information indicating that the economic crisis has reached its trough and that recovery could be around the corner," said analysts at JBC Energy.

"US banks appear to be doing better than everybody thought according to the Fed's preliminary release on the stress test, while the rate of job losses in the country has slowed.

"In the wider picture there are also tentative signs that economic activity in China and India has been picking up with Chinese manufacturing having accelerated for the first time in nine months.

"The Baltic Dry Index also surged by 8.9 percent, day-on-day, and was last seen at over 2000 points; the Index is a daily average of the costs of shipping raw materials to end customers and so can be seen as a good barometer of the health of the world economy," added the analysts in a research note.

However Khamar of Sucden warned that oil prices could head lower in coming weeks should investors begin to show less optimism regarding an economic recovery.