Singapore: Oil rose to more than $51 a barrel on Thursday, extending the previous day’s gains, as traders focused on improving economic data and draining fuel stocks rather than the worsening swine flu virus.
A surprise 4.7 million barrel decline in US gasoline stocks ahead of the driving season and stock market gains aided oil’s 2% rise on Wednesday, although prices remained stuck in the $45-$55 range that has bound them for the past six weeks.
US light sweet crude for June delivery rose 23 cents to $51.20 a barrel by 0230 GMT on Thursday. Brent crude gained 21 cents to $50.99.
Prices are on track to gain 3% this month, their third monthly rise, but the rebound from February’s $33 low has stalled as traders await further evidence that the economy’s decline is easing, offering an improved outlook for oil demand.
“I think there’s going to be a bit more of tracking broadly sideways as the market tries to interpret the signals from the economic data and whether we’re at the trough in the economic cycle,” said Ben Westmore, commodities analyst at National Australia Bank.
And while Wednesday’s government data showed a surprise decline in nationwide gasoline inventories that eliminated a supply surplus heading into peak driving season, he noted that crude stocks had continued to bulge.
The Energy Information Administration weekly report also showed a 4.1 million barrel increase in crude oil stockpiles, bringing inventories to a new 19-year high, and a 1.8 million barrel increase in unseasonally high distillate stocks.
News that the World Health Organization (WHO) had raised its threat level on the swine flu virus also failed to dampen the mood as traders took a wait-and-see approach over whether it would become a pandemic that could further cut fuel demand.
“The market is waiting for a bit more clarification how bad a problem it is,” said Westmore.
Oil gained on Wednesday after traders looked past the surprisingly big 6.1 contraction in the economy in the first quarter to focus on the details of a big run-down in inventories.
US stocks, an increasingly important mood indicator for oil markets, climbed more than 2%, after hints of future expansion were further reinforced by comments from the US Federal Reserve, which said the pace of deterioration in the economy appeared to be slowing.
Adding to the growing glimmers of economic hope, industrial output in hard-hit Japan rose 1.6% in March, the first gain in six months, contributing to a 4% gain in the Nikkei average.
A Reuters’ poll forecast world oil demand would fall this year by 1.56 million barrels per day, much more than previously expected, as growth stalls in emerging powerhouses such as China and consumption declines in the developed world.