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Economic recovery hopes give oil a lift
07.05.09
Oil prices headed towards six-month highs of $57 a barrel today on hopes the global economy may start to recover by the end of the year.
Crude was up 36 cents to $56.51 a barrel in London and 25 cents to $56.59 in New York, the highest level since mid-November, amid signs a recovery in the US could drag the world out of recession.
Oil has spent the last few months trading between $45 and $55 a barrel having tumbled as low as $35 a barrel from a record $147 in July.
Francisco Blanch, head of global commodity research at Bank of America Merrill Lynch, said the fiscal stimulus packages implemented by governments around the world, including the US, UK and China, should eventually spark growth and demand for oil.
"If we print enough money, we will get people to buy. If you give money to the world, the world will spend it," he said.
But some analysts warned the economy may not recover enough to warrant higher oil prices.
Michael Coleman, managing director of hedge fund Aisling Analytics in Singapore, said: "There's a 20% to 30% risk that things stabilise and then get worse again. In that scenario oil would go to $20."
