Oil $US 72/Barrel

Oil prices rose for the third consecutive day today as the International Energy Agency (IEA) published its most upbeat data for 10 months and suggested the global recession might be past its peak.

In its closely watched monthly survey, the Paris-based agency said that global oil demand would fall by 2.9 per cent to 83.3 million barrels a day this year, a less severe fall than it predicted last month.

In May, the IEA was expecting a 3 per cent annual fall in demand, the sharpest rate of decline since 1981.

“These revisions do no necessarily imply the beginnings of a global economic recovery and may only signal the bottoming out of the recession,” the IEA said.

Since predicting in August that 2009 global oil demand would reach 87.8 million barrels a day, the IEA has steadily lowered its forecasts as the financial crisis plunged the world into the deepest global recession since the Great Depression.

But the price of oil has gained over the past weeks, rising from near $35 a barrel in March to highs above $72 today, their highest level so far this year.

Prices were pushed up particularly by this week’s announcement that stockpiles of US oil tumbled by 4.4 million barrels last week — far more than market expectations of a 700,000-barrel drop.

Benchmark crude for July delivery rose as high as $72.18 a barrel and was up 47 cents to $71.80 by noon European time in electronic trading on the New York Mercantile Exchange. On Wednesday, it rose $1.32 to settle at $71.33.

“Investors are expecting a quick turn around,” said Ben Westmore, an energy analyst with National Australia Bank in Melbourne. “If the data in the coming months shows there isn’t a quick rebound, the oil price should fall.”

Prices rose despite indicators of continued economic problems. Poor trade numbers from China on Thursday suggested a global recovery could be slower than some investors were expecting.

Iran and Kuwait, members of the Organization of Petroleum Exporting Countries, said Wednesday the group may raise output if oil prices keep rising. OPEC slashed output 4.2 million barrels a day between September and January in a bid to bolster prices.

Adapted from International Pres Reports

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