Oil rose above US$51 (S$75) a barrel on Thursday in Asia as investors took heart from optimistic comments from the US Federal Reserve that the worst recession in decades is likely easing. Benchmark crude for June delivery was up 49 cents to $51.46 a barrel by afternoon in Singapore, in electronic trading on the New York Mercantile Exchange. The contract on Wednesday gained $1.05 to settle at $50.97. Investors have brushed off recent dismal news - such as the 6.1 percent contraction in the US economy in the first quarter - and pointed to so-called 'green shoots,' positive signs that the economy may be turning around. Federal Reserve policymakers said at the end of a two-day meeting on Wednesday that while the economy is still receding, the pace of decline 'appears to be somewhat slower' than the last time they met in mid-March. Investors, cheered by signs that US consumer spending is growing, sent the Dow Jones industrial average up 2.1 per cent on Wednesday.
'Investors are looking ahead and betting that the worst economic declines are over,' said Victor Shum, energy analyst with consultancy Purvin & Gertz in Singapore. 'In the past few weeks, investors have pretty much ignored any bad news.' This month prices have crisscrossed $50 a barrel as surging crude inventories tempered renewed optimism about the economy. The Energy Information Administration reported on Wednesday that oil inventories jumped by 4.1 million barrels for the week ended April 24, more than twice what was expected by analysts, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. US stores of crude have reached levels not seen since Aug 31, 1990. Government data also show that petroleum consumption is down to 18.4 million barrels a day, the lowest since May 28, 1999.