Oil jumps above 60 dollars

LONDON (AFP) - Oil prices rose sharply on Tuesday, with the New York contract hitting a six-month high above 60 dollars as the US currency tumbled against other leading units, traders said.
New York’s main futures contract, light sweet crude for delivery in June, jumped to 60.08 dollars per barrel, its highest point since mid-November before slipping back to 58.62 dollars, up 12 cents from Monday’s close.
Brent North Sea crude for June delivery added 10 cents to 57.58 dollars a barrel.
The gains came as the euro soared to 1.3707 dollars, its highest level for one and a half months. A weak dollar stimulates demand for dollar-priced crude because it becomes cheaper for buyers using stronger currencies.
Crude oil prices have found support in recent days from rallying stock markets and a falling dollar rather than from signs of rebounding demand for energy, according to analysts. “This market seems to have found a bit of a comfort zone (at current price levels),” said Dave Ernsberger, a senior editorial director at energy information provider Platts.
Many market watchers believe the dollar is likely to decline against most rival currencies in the coming months as risk aversion recedes on hopes the worst of the global slump is over.
However Ernsberger said he expects the rally in oil prices to weaken as the ailing global economy will keep demand down.
“There’s not much steam left in the rally. The market’s done a lot in a short span of time; there’s not much it can do in this economic environment,” he said.
The market was meanwhile waiting for the weekly US energy inventory report due Wednesday for signs of strengthening demand in the world’s biggest economy, which is reeling from a deep recession.
Traders were also looking ahead to an OPEC production meeting scheduled for May 28.
OPEC secretary general Abdalla Salem El-Badri said recently that the cartel wants to see crude at more than 70 dollars as its members appeared divided on whether to further reduce output to support prices.
The Organization of Petroleum Exporting Countries pumps about 40 percent of world crude and its members have seen their incomes slide over the past year as the price of oil has slumped from record highs above 147 dollars.