VIENNA (AP) - Oil cleared the $50 a barrel hurdle Thursday, as traders took heart from rallies in global stock markets as an indication of overall investor optimism.
But the murky outlook for the global economy was likely to keep prices relatively volatile in the medium term, with crude’s rise and fall expected to follow the performance of global markets.
Benchmark crude for April delivery rose $2.25 to $50.39 a barrel by midday in Europe on the New York Mercantile Exchange, trading at levels last seen in late 2008 when oil was falling from stellar prices near $150 a barrel.
Wall Street advanced Wednesday for the sixth time in seven days, buoyed by news the U.S. Federal Reserve plans to buy $1.25 trillion of government bonds and mortgage-backed securities. The purchases are designed to help revive the housing market and drive down borrowing costs for everything from mortgages to credit cards.
Since the rally began last week, the Dow Jones industrial average has jumped 14.4 percent. Asian stock markets, which have also risen steadily since last week, were mixed Thursday.
Still, it was unclear whether oil demand from developed countries, which are still reeling from a financial crisis and severe recession, can justify sustained trading above $50 a barrel.
“There is still plenty of uncertainty about the U.S. economy,” said Gerard Burg, minerals and energy economist with National Australia Bank in Melbourne. “Demand remains broadly weak. It’s likely we’ll see a pull back.”
Oil is up despite signs that U.S. crude supplies are rising. The Energy Information Agency reported crude inventories rose 1.94 million barrels for the week ended March 13. The 353.3 million barrels of crude is the highest reported level in U.S. inventories since June 29, 2007.
Gasoline stocks surged by 3.2 million barrels, surprising analysts who had expected a draw down of 2.1 million barrels.
“We’ve seen a steady increase in U.S. oil inventories for the last six months,” Burg said. “There’s very little on the supply side to indicate a push higher in prices.”
In other Nymex trading, gasoline for April delivery jumped by more than 4 cents to $1.41 a gallon, while heating oil surged over 7 pennies to trade at $1.34 a gallon. Natural gas for April delivery was steady at $3.69 per 1,000 cubic feet. In London, Brent prices rose $2.20 to $49.86 on the ICE Futures exchange.
Associated Press writer Alex Kennedy contributed to this report from Singapore.