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Oil rises above $53, extending rally | ASHARQ AL-AWSAT English Archive 2005 -2017
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(AP) – Oil prices rose above $53 a barrel Friday, extending a rally fueled by market optimism that crude demand may rebound if the U.S. economic downturn bottoms out soon.

Investors remained cautious, however, ahead of a crucial U.S. jobs report later in the day.

Benchmark crude for May delivery rose 41 cents to $53.05 a barrel by midday in Europe in electronic trading on the New York Mercantile Exchange. The contract rose $4.25 on Thursday to settle at $52.64.

In London, Brent prices rose 46 cents to $53.21 a barrel on the ICE Futures exchange.

Oil prices have bolted from below $35 a barrel six weeks ago, riding a wave of improving investor sentiment that the worst of the U.S. recession may be over. Crude prices have mirrored a surge in stock markets, with the Dow Jones industrial average up more than 20 percent during the last month.

“At this point, it’s more momentum than fundamentals,” said Gerard Rigby, energy analyst with Fuel First Consulting in Sydney. “People are expecting oil to jump over the next 12 to 24 months.”

Investors brushed off evidence this week that U.S. crude inventories are at a 16-year high.

Crude inventories grew by 2.8 million barrels, or 0.8 percent, for the week ended March 27, the Energy Department’s Energy Information Administration said in its weekly report on Wednesday. Oil stockpiles have not been this high since July 1993 and are 15.5 percent above year-ago levels.

“In other words, we are swimming in oil,” said The Schork report edited by U.S. analyst and trader Stephen Schork. “We are swimming in oil because production is strong and demand is weak … and it is going to remain that way in the short run.”

Despite the glut, Schork said the market was “choosing to ignore blatant bearish metrics and is instead attaching itself to any positive thread the bulls can conjure up,” such as stock markets and the weaker dollar.

Investors will be closely watching the U.S. jobs report for March, which is scheduled to be released later Friday.

Economists predict the report will show a loss of 654,000 jobs following a drop of 651,000 jobs in February, which was a record third straight month of job losses above 600,000. The unemployment rate is expected to rise to 8.5 percent from 8.1 percent in February.

“If the unemployment rate in the U.S. goes up a lot, it would definitely put the brakes on the recent price increase,” Rigby said.

Olivier Jakob of Switzerland’s Petromatrix, however, noted that “so far this week the stock market has been able to absorb pretty well the worse than expected employment data and taking it as ‘old news.”‘

In other Nymex trading, gasoline for May delivery rose 0.71 cent to $1.4769 a gallon and heating oil gained 0.42 cent to $1.4433 a gallon. Natural gas for May delivery jumped 4.6 cents to $3.828 per 1,000 cubic feet.