London: Oil prices rose above $35 a barrel on Thursday ahead of United States data expected to show crude inventories in the top energy consumer hit an 11-year high amid a worsening recession.
Oil stocks in the US have risen by 20% since September as the downturn has crushed consumption, and helped pull crude prices more than $110 off their peaks last summer.
A day ahead of expiry, US crude futures for March delivery rose 53 cents to $35.15 a barrel by 2:30pm, while April delivery contracts rose 63 cents to $38.04. London Brent for April delivery rose 97 cents to $40.52.
The global economy continues to look dire. Japan is likely to see bleak GDP growth in the first half of the year, Bank of Japan Governor Masaaki Shirakawa said on Thursday, adding the outlook for the world’s number two economy was highly uncertain.
In the United States, with employment, housing and credit conditions showing no signs of a turnaround, the US central bank forecast the world’s top economy would shrink by between 0.5% and 1.3% this year.
The US recession looks poised to last at least a few months longer, which would make it the longest downturn since the Great Depression, a top White House adviser said on Wednesday.
“We’re going to keep leaning forward trying to do all the things that we can to propel the economy forward, because as the president has recognised, the risks of doing too little are much greater than the risks of doing too much,” National Economic Council director Lawrence Summers told CNN.
US President Barack Obama pledged up to $275 billion on Wednesday to help stem a wave of home foreclosures, part of a broad effort using massive sums of government money to lift the country out of recession.
But the plan failed to prop up sentiment on Wall Street, with the Dow closing barely higher on Wednesday and the wider S&P 500 index falling. Japan’s Nikkei average closed up 0.3% on Thursday.
Crude stockpiles in the United States likely rose last week by 3.0 million barrels to their highest since May 1998, a Reuters poll of analysts showed ahead of the US Energy Information Administration (EIA) data due out later in the day.
The American Petroleum Institute (API) said on Wednesday crude stocks rose last week by 1.6 million barrels. The EIA report is widely regarded as more accurate than the API’s because US energy firms are required to participate.