Oil prices hit six month high of $63

Crude oil price rose to a six-month high on Wednesday touching $63 per barrel on the back of a report that United States petrol supplies fell for a fifth week amidst growing optimism that the worst of the recession is over.

This is good news for Nigeria that pegged its 2009 budget on $45 per barrel and which has been battling with declining production because of crisis in the Niger Delta.

Oil price rose to above $63 per barrel in both London and New York and Saudi Arabia’s oil minister, Ali al-Naimi, was quoted as saying, oil demand had started to recover.

Crude price rose above its 200-day moving average for the first time since September, a sign that prices may rally further.

Crude oil for July delivery rose as much as $1, or 1.6 per cent, to $63.45 a barrel in electronic trading on the New York Mercantile Exchange. That’s the highest since November 13, 2008. Oil reached $63.12 at mid-morning trading in London

“It looks like we won’t see any significant deterioration in demand anymore, hence Organisation of Petroleum Exporting Countries is bullish,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “But, we still need to see improving gasoline demand in the US.”

The US Conference Board’s sentiment index surged to 54.9, more than forecast and the biggest increase since 2003, the New York-based research group said yesterday.

OPEC, responsible for 40 per cent of global crude supply, is likely to keep output quotas unchanged for a second time this year as recovering oil prices forestall the need for new cuts, according to a Bloomberg survey published on May 22.

The OPEC has “no need” to cut oil production because there are signs of a recovery in demand, Saudi Arabia’s Ali al-Naimi told reporters on Thursday in Vienna, where the group meets today.