Oil extended gains towards $57 a barrel today, after settling at a five-month high in the previous session when a falling number of US job losses and US inventory data brightened hopes for an economic revival.
Expectations for rising oil demand as summer approaches were also fuelled by financial optimism as leaked bank stress test results suggested most banks were healthier than earlier thought.
US light crude for June delivery rose 38 cents a barrel to $56.72 by 0625 GMT, adding to $2.50 gains on Wednesday when it settled at $56.34, its highest close since Nov 14, 2008.
London Brent crude rose 45 cents to $56.60.
“We are bullish the energy sector. Demand is still relatively weak but if you look at seasonality, traditionally the driving season comes into play from the middle of May and then you worry about the hurricanes from the early part of July,” said Peter McGuire, managing director of Commodity Warrants Australia.
A slowdown in US private sector job losses in April, as employers cut 491,000 from the salary rolls versus an expected loss of 650,000, was seen as a signal that the economy may be on its way to recovery, and helped oil higher.
Oil also rose as fundamentals improved, albeit marginally, with US gasoline stocks declining unexpectedly last week by 200,000 barrels to 212.4 million, the Energy Information Administration said on Wednesday.
US crude inventories gained again, but by a lower-than-expected 600,000 barrels against forecasts for a 2.2 million barrels build.
This left crude stocks at a fresh 19-year high of 375.3 million barrels, while distillates stocks rose by a larger-than-forecast 2.4 million barrels.
Oil has tracked a recovery in the equity markets over the past month, with the US S&P index up some 36 per cent from March lows, despite what many still see as weak fundamentals.
“Anticipating an economic recovery, the market is “retaliating” with prices rising now before there are any truly definitive signs of such an economic and/or oil demand recovery,” Canadian consultancy First Energy Capital said in a note.
Japan's Nikkei average surged 4.55 per cent after a three-day holiday in the country as investors sought to catch up with gains of 8 per cent so far this week by the MSCI regional index outside Japan that has brought the gauge to its highest since early October.
Reuters