Brent oil hits 5-week high of $120

Brent crude rose to $120 a barrel for the first time in five weeks, while US oil climbed above $102 a barrel, on better-than-expected data from top consumer United States and supply worries triggered by Opec's failure to agree on an output hike.

A softer dollar against a basket of currencies and political tensions in the Gulf also supported oil prices.

"The better-than-expected U.S. trade deficit results boosted not only the US equities but commodities as well," said Singapore-based oil analyst Serene Lim of ANZ Bank. "The positive sentiment continued into Asia's morning trades."

A Commerce Department report showed the US trade deficit narrowed unexpectedly in April as exports hit a new high and imports from Japan tumbled more than 25 per cent after its earthquake, tsunami and nuclear disaster.

The trade gap narrowed 6.7 per cent from March to $43.7 billion even though oil prices hit their highest level since September 2008. The data suggested stronger second-quarter economic growth than economists had expected.

The Organization of the Petroleum Exporting Countries (Opec) failing to make a decision on output could continue to buoy prices in the short-haul, analysts believe.

Opec met on Wednesday and for the first time in about a decade failed to agree on output policy.

Numbers compiled at the Opec headquarters in Vienna had implied the market needed around 2 million barrels per day (bpd) more oil for the third quarter of this year and 1.5 million bpd for the fourth quarter, Opec secretary general Abdullah al-Badri told a world economic forum conference.

But he said some of the 12 members of Opec had different numbers and were unable to agree on any need for more oil, even though oil prices are trading far above $100 a barrel.

Technical charts indicate an end in rebound for both Brent and US oil, according to Reuters market analyst Wang Tao. Brent may end its current rebound at $121 while US crude may end it at $103.

The political tension in Libya, Syria and Yemen continued to keep support oil prices.

Reuters