Friday April 24, 03:55 PM
Oil prices rebound on weak dollar, strong equities
LONDON (AFP) - Oil prices jumped above 51 dollars on Friday, winning support from the flagging dollar and rising stock markets, despite concerns about weak demand arising from the global economic downturn.
Brent North Sea crude for delivery in June soared 1.43 dollars to 51.54 dollars a barrel in afternoon trade.
New York's main futures contract, light sweet crude for June, gained 1.60 dollars to 51.22 dollars per barrel.
The "advance in crude continues to defy weak global demand," said ODL Securities analyst Marius Paun.
"This show of strength in the energy complex was rather driven by a weakening in the US dollar against the euro, combined with a renewed strengthening in the equity markets."
Wall Street opened on an upbeat note Friday after Ford Motor Co. boosted sentiment with narrower-than-expected loss and comments that its restructuring is on target without government aid.
The Dow Jones Industrial Average rose 0.62 percent to 8,006.68 in the first exchanges on Friday, adding to gains from a modest rally Thursday.
Europe's main stock markets also bounced higher, winning almost three percent in value in late afternoon deals.
In the foreign exchange market, the euro climbed against the dollar as investors welcomed news that German business confidence rebounded in April, while the greenback was hindered by US auto sector concerns.
A weak US unit tends to boost demand because it makes dollar-priced crude cheaper for foreign buyers using stronger currencies.
Earlier this week, oil prices had fallen as traders digested news of rising energy inventories in the United States -- the world's biggest oil-consuming nation.
"The fundamentals (of supply and demand) of oil are still poor and stocks are still plentiful," said Petromatrix analyst Oliver Jakob.
The US Department of Energy (DoE) said Wednesday that American crude oil stockpiles had surged 3.9 million barrels in the week ending April 17 -- marking the sixth weekly gain in a row.
Crude inventories in the United States are about 17 percent above their level at the same stage last year, and remain at the highest level since September 1990.
Oil prices have slumped since striking record peaks above 147 dollars per barrel in July 2008, as demand melted in the face of a vicious global economic slowdown.
Elsewhere in the market, OPEC chief Abdalla Salem El-Badri does not expect the oil cartel to cut production at a key meeting next month, Dow Jones Newswires reported on Friday.
Despite signs of even weaker crude demand and swelling oil inventory in big energy consuming nations, the Organization of Petroleum Exporting Countries first needed to fully implement an agreement announced in December to remove 4.2 million barrels a day from world markets, El-Badri said in an interview.
"We need to take all that off the market before we can talk about new cuts," El-Badri said.
Nevertheless, he did not want to pre-empt discussions at the meeting in OPEC's Vienna headquarters on May 28, he insisted.
The cartel's 12 ministers "can come together and not hesitate to take action," El-Badri said.
OPEC has reduced its oil production target by an overall 4.2 million barrels per day since September to 24.84 million bpd, the lowest since just after the US-led invasion of Iraq in 2003.
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