Oil tops $51 on stronger equities, weaker dollar
An attendant holds a petrol nozzle at a petrol pump in the northeastern Indian city of Siliguri August 5, 2008.
Credit: Reuters/Rupak De Chowdhuri
NEW YORK (Reuters) - Oil prices rose nearly 4 percent on Friday, settling above $51 a barrel on support from firmer stock markets and a weaker U.S. dollar.
U.S. crude oil futures rose $1.93, or 3.9 percent, to settle at $51.55 a barrel after rising as high as $51.75. London Brent crude rose $1.56 to $51.67.
The gains came as better than expected earnings and relatively robust U.S. durable goods orders figures boosted shares on Wall Street.
"Our market's been strong and taking direction from equities," said Addison Armstrong, analyst at Tradition Energy in Stamford Connecticut.
Oil prices have been tracking equities closely in recent weeks as investors look to stocks for signs of an economic recovery that could revive demand for fuel.
Weakness in the U.S. dollar also buoyed oil and other commodity prices, dealers said, by raising the purchasing power of buyers using other currencies.
But weak global demand for oil during the recession has pushed inventories in consumer nations to historic levels, keeping a lid on price gains.
Inventories in the United States, the world's top oil consumer, are the highest in almost 19 years, according to the U.S. Energy Information Administration.
Oil storage tanks are also close to capacity elsewhere. According to some estimates, oil companies have stored about 100 million barrels of oil on ships at sea. That is more than the world's daily oil demand of roughly 84 million barrels.
The global market's focus will shift to the results of a U.S. bank "stress test" that would show how much capital any big bank might need to weather global economic crisis.
U.S. regulators are conducting the tests on 19 of the largest U.S. banks and the process enters a critical final phase on Friday when regulators start discussing the findings with the banks.
Some investors are putting money in oil ahead of the result, in an attempt to avoid any further bad news from the banking sector and potential market impact, Phil Flynn, analyst at Alaron Trading in Chicago, said in a note.
The oil market has stagnated around $50 a barrel for most of this month, nearly $100 below last July's all-time high of $147.27.
(Additional reporting Robert Gibbons, and Gene Ramos in New York, Ikuko Kao in London and Chua Baizhen in Singapore; Editing by David Gregorio)
