Crude oil climbs on global buoyancy

Oil prices climbed above US$57 per barrel for the first time this year after the results of the US government's stress tests showed large American banks' health is not as bad as earlier anticipated, raising optimism that the worldwide recession will end earlier than expected. Crude oil was headed for the biggest weekly gain since March before a report forecast to show that the US cut fewer jobs in April. Oil prices gained 8.5% this week after economic data indicated the worst of the global recession is over. Crude oil for June delivery rose as much as US$1.16, or 2.1%, to US$57.87 a barrel in electronic trading on the New York Mercantile Exchange, and was at US$57.73 at 10:40 a.m. London time on Friday. Oil, poised for the largest gain since the week ended March 20, is up 29% this year.

Meanwhile, US refineries boosted their operating performance last week to their highest level since December, the Energy Department said , and crude stockpiles increased less than analysts had estimated. US refiners operated at 85.3% of capacity in the week ended May 1, up 2.7% from the week before. Crude inventories rose by 605,000 barrels last week, versus analysts’ forecasts for a gain of 2.5 million barrels. The increase in US crude supplies brought inventories to 375.3mn barrels last week, the highest since 1990.

Separately, Barclays Capital said that crude has broken through the US$55.02 to US$56.10 a barrel range that technical analysts said could trigger a move to US$62. Prices may now surge to US$71.55, according to a report by the bank. Crude oil is set to reach US$62.65 a barrel in the near future and rally to US$78 within six months as prices retrace the surge that started in 1998, according to technical analysis by PVM Oil Associates Ltd.