Oil Rises to 6-Month High as OPEC Meet Nears
SINGAPORE – Oil prices rose to six-month highs Wednesday in Asia as an increase in U.S. consumer confidence fueled optimism that the world's largest consumer of oil is emerging from a severe recession.
Traders were also watching an OPEC meeting in Vienna amid expectations the oil cartel isn't likely to cut production.
Benchmark crude for July delivery was up 76 cents to $63.21 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract rose 78 cents to settle at $62.45.
Oil prices have jumped from below $35 a barrel in March on investor expectations that the worst of the global economic slowdown is over.
Oil and stock investors took heart from Tuesday's report from private research group The Conference Board that showed U.S. consumer confidence in May soared to the highest level since last September. Stock indexes jumpe on the news, with the Dow Jones industrial average gaining 2.4 percent.
Some analysts are concerned the quick recovery of oil prices will boost gasoline prices and threaten to undermine consumer demand. Oil prices between $70 and $80 a barrel would hurt growth in developed countries while crude between $90 and $100 would slow emerging market economies, Bank of America Merrill Lynch said in a report Tuesday.
"A very fast increase in oil prices in the coming months could put the embryonic economic recovery at risk," the report said.
Traders will be eyeing an OPEC meeting in Vienna on Thursday. Saudi Arabian Oil Minister Ali al-Naimi has said the Organization of Petroleum Exporting Countries is unlikely to add to 4.2 million barrels a day of production cuts the cartel has announced since September.
The group's leaders have said they want oil prices above $70 a barrel.
The OPEC supply cutbacks, along with massive fiscal stimulus packages by governments around the world, could send prices higher, the Bank of America Merrill Lynch report said.
In other Nymex trading, gasoline for June delivery rose 3.06 cents to $1.88 a gallon and heating oil was steady at 1.55 cent to $1.52 a gallon. Natural gas for June delivery was steady at $3.54 per 1,000 cubic feet.
In London, Brent prices rose 73 cents to $61.97 a barrel on the ICE Futures exchange.