Oil prices reach six-month high

May 30, 2009

Oil prices attained a six-month high on Friday, on new signs that the U.S. economy may not be contracting as fast as was believed.

U.S. crude oil prices reached US$66.47 a barrel, a level not seen since last November. Brent North Sea crude oil was up $1.13 to $65.52 at the end of the week, after peaking at $65.70, also the highest level since November.

This comes soon after a report released by the U.S. Commerce Department showed that the U.S. GDP fell by 5.7%, revised from the original figure of 6.1%.

Analysts predict that oil prices will continue to rise amid more positive economic news, especially from economic giants such as India and Japan.

"Oil market participants' conclusion that the worst of the recession has passed and that a recovery in demand must be at hand was bolstered overnight by higher than expected first quarter growth in India and a sharp jump in Japan's April industrial production," said MF Globa's John Kilduff.

"We've got a lot more optimism about the economic outlook than we did. The market is factoring in a recovery in demand by the end of the year," said an analyst for the Commodity Warrants Australia, Toby Hassall.