Oil near $72 on economic recovery hopes

VIENNA: Oil prices hovered near $72 a barrel Thursday as investor optimism about a global economic recovery pushed crude to fresh highs for the year.

Oil has jumped from below $35 a barrel in March on expectations the worst of a severe U.S. recession was over. Traders are now beginning to price in a recovery by the end of the year and improving crude demand.

Benchmark crude for July delivery rose as high as $72.18 a barrel and was up 47 cents to $71.80 by noon European time in electronic trading on the New York Mercantile Exchange. On Wednesday, it rose $1.32 to settle at $71.33.

``Investors are expecting a quick turn around,'' said Ben Westmore, an energy analyst with National Australia Bank in Melbourne. ``If the data in the coming months shows there isn't a quick rebound, the oil price should fall.''

Prices rose despite indicators of continued economic problems. Poor trade numbers from China on Thursday suggested a global recovery could be slower than some investors were expecting. Chinese exports fell 26.4 percent in May from a year earlier while imports dropped 25.2 percent, the customs agency said.

Still, U.S. crude stocks have fallen for four straight weeks, suggesting demand could be recovering.

The Energy Department's Energy Information Administration said Wednesday that crude inventories fell 1.6 million barrels in the week ended June 5. Analysts had expected a build of 800,000 barrels.

``We might be seeing the early signs of a trend,'' Westmore said. Investors have also sought crude as a hedge against inflation on fears massive fiscal stimulus spending could weaken the U.S. dollar. The euro gained to $1.4029 on Thursday from 1.3990 the previous day.

Iran and Kuwait, members of the Organization of Petroleum Exporting Countries, said Wednesday the group may raise output if oil prices keep rising. OPEC slashed output 4.2 million barrels a day between September and January in a bid to bolster prices.

The group appears to have plently of marketable crude in reserve. Saudi Arabia's ``production capability will reach 12 million barrels a day in the next couple of weeks,'' said Vienna's JBC Energy, citing Saudi Aramco, the kingdom's oil company. A JBC newsletter said the Saudis last month were pumping 7.9 million barrels a day.

In other Nymex trading, gasoline for July delivery rose by nearly a penny to $2.02 a gallon and heating oil gained more than a cent to fetch $1.85. Natural gas for July delivery was up by more than 3 cents at $3.74 per 1,000 cubic feet.

In London, Brent prices added 57 cents to $71.37 a barrel on the ICE Futures exchange.