May 27 (Bloomberg) -- Oil rose above $63 a barrel for the first time in six months after Saudi Arabia’s oil minister said crude is likely to touch $75 by the end of the year. Asian demand has begun to recover and higher prices will be healthy for economic growth, Ali al-Naimi said today in Vienna, where OPEC will meet tomorrow to discuss production targets. A government report tomorrow is forecast to show that U.S. gasoline supplies fell for a fifth week as demand rose.
“The Saudis are saying that they are confident that the economy can withstand oil at $75 so they will be in no rush to break this market,” said Nauman Barakat, senior vice president of energy at Macquarie Futures USA Inc. in New York. “We are seeing increasing signs that the worst of the recession is over.”
Crude oil for July delivery rose $1, or 1.6 percent, to settle at $63.45 a barrel at 2:45 p.m. on the New York Mercantile Exchange, the highest settlement since Nov. 5. Prices are up 42 percent this year.
Oil rose above its 200-day moving average for the first time since September, a signal that prices may rally further. Technical traders watch for patterns on charts for clues to price direction, and may sell or buy based on those signals.
The Organization of Petroleum Exporting Countries is likely to keep output quotas unchanged for a second time this year as recovering oil prices eliminate the need for new cuts, according to a Bloomberg survey published on May 22. Saudi Arabia is the biggest and most influential member of OPEC.
Market Optimism
“The price rise is a function of optimism that better things are coming in the future,” al-Naimi said. “If demand picks up, then why do anything? The fundamentals are strengthening.” more...
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