Oil prices rose to a six-month high above $66 a barrel today, on track for its largest monthly percentage gain in over a decade, after US, Japanese and Indian data suggested the economic downturn may be easing.
Oil prices have jumped around 30% this month, the largest monthly rise since March 1999, buoyed by expectations of a global economic recovery later this year, which helped push stock markets higher.
US crude oil for July delivery was up 80 cents to stand at $65.88 a barrel this evening, after reaching $66.47 earlier today - its highest level since early November last year. London Brent crude gained 74 cents to $65.13.
The dollar hit a five-month low against a basket of other currencies. A weak dollar makes oil cheaper for holders of other currencies and tends to support prices.
Data today showed Japanese industrial production rose 5.2% in April on a monthly basis, and the government said it expected continued gains through June.
And US growth data today also reinforced the sense that the global economic slump might be abating.
The Commerce Department said the world's largest economy contracted slightly less than initially estimated in the first quarter, dropping at a 5.7% annual rate, rather than the 6.1% fall published by the government last month. The revision was still below market expectations for a 5.5% contraction for the January-March quarter, however.
Meanwhile, India's economy grew faster than expected in the first quarter, helped by strength in farm and services sectors.
Another factor behind the price increase was yesterday's report by the US Energy Information Administration on US crude oil stocks, which fell 5.4 million barrels in the week to May 22, way above analysts' expectations for a 700,000 barrel decline.
Petrol inventories also fell for the fifth week in a row as demand rose in the week preceding the Memorial Day holiday, which traditionally marks the start of the summer driving season in the US.
OPEC's decision to hold oil production steady also helped prop up prices. The producer group yesterday kept its output targets unchanged as expected, betting on a strengthening world economy and tentative signs of increased demand.
