Oil prices climbed toward $51 per barrel on Wednesday, supported by rising stock markets and a bigger-than-expected decline in U.S. gasoline inventories.
By 1550 GMT (11:50 a.m. EDT), U.S. crude oil for June delivery rose 99 cents to $50.91, having hit a high of $51.42. London Brent crude was up 93 cents to $50.92 a barrel.
The gains came amid a more than 2 percent rise in U.S. stock markets <.DJI><.SPX> tied to hopes the recession may be abating, even as a report showed a dismal 6.1 percent contraction in the U.S. economy in the first three months of the year.
Analysts said the oil market also found support from a U.S. Energy Information Administration report showing a surprise 4.7 million-barrel decline in nationwide gasoline inventories that eliminated a supply surplus heading into peak driving season.
I think the gasoline draw is what caught everybody's eye. Nobody expected a draw of that magnitude, said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.
The EIA's weekly report also showed a 4.1 million-barrel increase in crude oil stockpiles last week, bringing inventories to a fresh 19-year high.
The gradual global spread of swine flu, with the first U.S. death confirmed from the H1N1 strain, also failed to dent the oil market. We have had a high correlation between stock markets and oil over the last few weeks and when equities go up, so do oil and other commodities, said Frank Schallenberger, head of commodities research at Landesbank in Stuttgart.
REUTERS DEMAND POLL
Royal Dutch Shell
It will take time for the economy to recover, and hence the oil and gas price will be affected by that, Voser said.
A Reuters' poll of 11 analysts, banks and industry groups forecast world oil demand would fall this year by much more than previously expected, as growth stalls in emerging powerhouses China and India and fuel consumption declines in the developed world.
The poll showed oil use declining by an average of 1.56 million barrels per day (bpd) in 2009 to 84.10 million bpd. Estimates see oil growth reemerging in 2010.
(Additional reporting by Richard Valdmanis in New York; Editing by Marguerita Choy)