Oil prices breach 58 dollars

Agence France-Presse - 5/8/2009 7:44 PM GMT

Oil prices breach 58 dollars

Oil prices breached 58 dollars per barrel Friday as better-than-expected jobs data in key energy consumer the United States signaled a possible easing of a severe economic slump.

New York's main futures contract, light sweet crude for delivery in June, rose 1.92 dollars from Thursday's closing price to end at 58.63 dollars a barrel, capping a more than 10 percent rise over the week.

It hit an intraday high of 58.69 dollars on Friday, a level unseen since mid-November.

Brent North Sea crude for June delivery climbed 1.67 dollars to close at 58.14 dollars a barrel, after touching 58.30 dollars.

Amid the rally, some worried the jumping prices could dampen the very prospects of recovery.

"Energy bears are stunned. They say it is impossible and there is no reason for it," said Phil Flynn of Alaron Trading. "Energy seems to be defying gravity.

"The bears and the rest of the world are waking up to the fact that something has changed in the energy complex," he said.

Flynn said oil demand was still tepid and the rising prices might dampen demand.

This week, oil has also won support from rising stock markets amid increasing signs of economic recovery in the recession-hit United States, traders said.

Crude oil was boosted Friday after official data showed that US labor market losses eased in April with 539,000 jobs axed, while the unemployment rate hit 8.9 percent, suggesting the economy may be stabilizing.

The jobless rate hit its highest level since September 1983 but the pace of job losses slowed appreciably, offering another possible sign of an easing of the severe economic slump.

The number of job losses was not nearly as bad as the consensus Wall Street estimate of 600,000 in the Labor Department monthly payrolls report, one of the best indicators of economic momentum.

Prices have posted solid gains this week on hopes of a recovery in energy demand, but they remain far below last July's record peaks above 147 dollars a barrel.

"Oil prices have been surging this week on titbits of information indicating that the economic crisis has reached its trough and that recovery could be around the corner," said analysts at JBC Energy.

The markets were also reassured by the release of "stress tests" on the US banking system, with major lenders seen as being able to cover capital shortfalls.

"US banks appear to be doing better than everybody thought according to the Fed's preliminary release on the stress test, while the rate of job losses in the country has slowed," JBC analysts said.

"In the wider picture there are also tentative signs that economic activity in China and India has been picking up with Chinese manufacturing having accelerated for the first time in nine months."

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