Oil Set for Biggest Weekly Gain Since March on Demand Optimism

(Bloomberg) -- Crude oil rose for a third day in New York, poised for the biggest weekly gain since March, on signs the global economy may be starting to recover. Oil has advanced this week as equity markets rose on speculation the outlook for growth is improving. A U.S. government report yesterday showed the worst of the nation’s job cuts may be over. “We are getting a bit of a consistent run of slightly better-than-expected economic data out of the U.S.,” said Mark Pervan, a senior commodity strategist at Australia and New Zealand Banking Group Ltd. in Melbourne. “Oil is maybe moving to a higher trading range, pushing through what looked like a key resistance level of $55 a barrel.”Crude oil for June delivery rose as much as 59 cents, or 1 percent, to $57.30 a barrel in electronic trading on the New York Mercantile Exchange, and was at $57.26 at 9:48 a.m. Singapore time.

Oil is set to reach $62.65 a barrel “in the near future” and rally to $78 within six months as prices retrace the surge that started in 1998, according to technical analysis by PVM Oil Associates Ltd.Yesterday, oil closed at $56.71, the highest settlement since Nov. 14. Prices have gained 7.7 percent this week, poised for the largest gain since the week ended March 20, and are up 28 percent this year.Crude retreated from an intraday high of $58.57 yesterday as U.S. equities gave up some of their gains. Stocks slid from a four-month high as declines in financial, telephone and technology shares snuffed out an early rally. The S&P 500, which has risen 34 percent from a 12-year-low in March, slid 1.3 percent to 907.39. The Dow Jones Industrial Average decreased 1.2 percent to 8,409.85.

‘Exuberance’ Over Economy
The number of Americans filing for unemployment insurance fell last week to the lowest level in three months. Initial jobless claims dropped by 34,000 to 601,000 in the week ended May 2, the fewest since late January, the Labor Department said in Washington yesterday.

U.S. crude oil inventories rose 605,000 barrels to 375.3 million during the week ended May 1, the highest since 1990, according to a May 6 report from the Energy Department. Analysts forecast a gain of 2.5 million barrels. Gasoline supplies fell 167,000 barrels to 212.4 million, leaving stockpiles 2.8 percent above the five-year average for the period.

OPEC Ministers
Ministers from the Organization of Petroleum Exporting Countries are scheduled to discuss production levels at a May 28 gathering in Vienna. The group agreed at three meetings last year to reduce output by 4.2 million barrels a day to bolster prices.
The 12-member group will trim oil shipments to about 22.15 million barrels a day in the month ending May 23 from 22.28 million a day in the period to April 25, Oil Movements, the Halifax, England-based tanker-tracker, said yesterday. Shipments are at their lowest level since June 2003, its data show.