Wednesday May 27, 09:57 AM
Oil prices strike new six-month peak above $63
LONDON (AFP) - Oil prices hit a six-month high above 63 dollars per barrel on Wednesday, lifted by buoyant equity markets ahead of this week's OPEC output meeting, traders said.
In morning trade, New York's main futures contract, light sweet crude for delivery in July, soared as high as 63.45 dollars per barrel -- a level last seen on November 10.
The contract later stood at 63.27, up 82 cents from the closing level on Tuesday.
London's Brent North Sea crude for July advanced 77 cents to 62.01 dollars per barrel.
Asian and European stock markets bounced higher on Wednesday, mirroring an overnight surge on Wall Street as a surprisingly strong reading on US consumer confidence buoyed hopes of economic recovery.
New York's blue-chip Dow Jones Industrial Average had jumped by 2.37 percent or 196.17 points to end at 8,473.49 points on Tuesday.
"Yesterday's triple-digit gains in the Dow Jones (news) proved too difficult to ignore," said analyst Marius Paun at ODL Securities.
"As a result, crude made a new high bolstered by a weaker US dollar which is expected to provide the primary guidance going forward."
The struggling greenback makes dollar-priced crude cheaper for foreign buyers and therefore tends to stimulate demand.
The Organization of Petroleum Exporting Countries (OPEC), which pumps 40 percent of world oil, holds a crucial production meeting in Vienna on Thursday.
OPEC ministers look almost certain to keep the oil cartel's production steady, with the "green shoots" of world economic recovery too fresh to justify a cut, ministers and analysts said.
"All eyes will be on OPEC this Thursday, with expectations for no change in the group's production quotas," said VTB Capital analyst Andrey Kryuchenkov.
The price of crude has risen sharply in recent weeks, which has relieved the pressure on OPEC members even though oil remains far below the 75 dollars they would like to see.
Forcing prices higher, however, would dampen demand when major economies are critically weak.
The most influential member of the group, Saudi Arabia, was clear about its intentions on Tuesday when Oil Minister Ali al-Nuaimi told journalists here that OPEC would "stay the course."
A host of ministers will arrive in Vienna on Wednesday ahead of a formal output meeting on Thursday when members are expected to maintain the status quo, a production target of 24.84 million barrels per day.
OPEC cut its production target three times late last year to stabilise prices that tumbled from record highs above 147 dollars per barrel in July 2008 to 32.40 dollars in December.
Meanwhile, the weekly energy report from the US government's Department of Energy (DoE) will be published on Thursday, one day later than normal due to a public holiday on Monday in the United States.
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