Crude oil rose to a five-week high as US consumer confidence improved and manufacturing shrank at the slowest pace in seven months, signaling that the recession may end later this year.
Oil gained 4.1 percent after a report showed that confidence last month climbed to its highest level since before the collapse of credit late last year. Factory orders and production are steadying after plunging last year as companies cut stockpiles. Prices were down earlier as US supplies rose to the highest since 1990 and fuel demand dropped.
“Like a lot of markets we are rising on hope,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “Some people think that the rise in consumer confidence will result in increased petroleum demand.”
Crude oil for June delivery climbed US$2.08 to US$53.20 a barrel at 2:55pm on the New York Mercantile Exchange, the highest settlement since March 26. Prices are up 3.2 percent this week and 19 percent this year.
The Reuters/University of Michigan final index of consumer sentiment rose to 65.1, the second straight gain, from 57.3 in March. The index reached a three-decade low of 55.3 in November. The Institute for Supply Management’s factory index increased to 40.1 last month, higher than forecast, from 36.3 in March. Readings less than 50 signal a contraction.
Oil in New York has tumbled 64 percent from a record US$147.27 last July as the recession in major consuming countries curbed fuel demand. US fuel use in the first quarter averaged 19.2 million barrels a day, the lowest for the period in 11 years, the American Petroleum Institute said in a monthly report on April 16.
Brent crude oil for June settlement rose US$2.05, or 4 percent, to end the session at US$52.85 on London’s ICE Futures Europe exchange.
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