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Oil rises above $50 as stock rallies boost hopes

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[March 19, 2009]  SINGAPORE (AP) -- Oil rose above $50 a barrel Thursday in Asia, brushing off news of increasing U.S. crude supplies, as traders took heart from rallies in global stock markets as an indication of overall investor optimism.

But others cautioned that oil prices wouldn't go much higher because the outlook for the global economy remains murky.

RestaurantBenchmark crude for April delivery rose $1.98 to $50.12 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. Prices fell $1.02 on Wednesday to settle at $48.14.

Wall Street advanced Wednesday for the sixth time in seven days, buoyed by news the U.S. Federal Reserve plans to buy $1.25 trillion of government bonds and mortgage-backed securities. The purchases are designed to help revive the housing market and drive down borrowing costs for everything from mortgages to credit cards.

Since the rally began last week, the Dow Jones industrial average has jumped 14.4 percent. Most Asian stock markets advanced Thursday, too.

Still, some analysts doubt oil demand from developed countries, which is still reeling from a financial crisis and severe recession, can justify sustained trading above $50 a barrel.

"There is still plenty of uncertainty about the U.S. economy," said Gerard Burg, minerals and energy economist with National Australia Bank in Melbourne. "Demand remains broadly weak. It's likely we'll see a pull back."

Oil is up despite signs that U.S. crude supplies are rising. The Energy Information Agency reported crude inventories rose 1.94 million barrels for the week ended March 13. The 353.3 million barrels of crude is the highest reported level in U.S. inventories since June 29, 2007.

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Gasoline stocks surged by 3.2 million barrels, surprising analysts who had expected a draw down of 2.1 million barrels.

"We've seen a steady increase in U.S. oil inventories for the last six months," Burg said. "There's very little on the supply side to indicate a push higher in prices."

In other Nymex trading, gasoline for April delivery rose 1.43 cents to $1.38 a gallon, while heating oil gained 1.65 cents to $1.28 a gallon. Natural gas for April delivery was steady at $3.68 per 1,000 cubic feet.

In London, Brent prices rose $2.21 to $48.87 on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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