MW: Oil gains as data show less severe U.S. GDP contraction
Oil futures rose 1.5% on Friday after data showed a less severe contraction in the American economy than previously estimated, fuelling hopes that a recovery may spur energy demand.
Crude oil for July delivery gained 93 cents, or 1.4%, to $66.03 a barrel in electronic trading on Globex.
Earlier, the contract soared to an intraday high of $66.36 a barrel.
The Commerce Department reported Friday that U.S. gross domestic product fell at a revised 5.7% annual rate in the first quarter, after sinking 6.3% in the fourth quarter.
The negative 5.7% GDP estimate was slightly stronger than the first estimate of a 6.1% decline released a month ago.
The GDP revision "reflects hopes that the recession is bottoming," said analysts at Action Economics.
Oil futures rallied 3% to end above $65 a barrel on Thursday after government data showed U.S. inventories fell for a third-straight week.
Separately, the Organization of the Petroleum Exporting Countries decided on Thursday to maintain its current production levels.
"The severe and broad impact of the ongoing global economic downturn, precipitated by the financial crisis, has led to a weakness in global oil demand, which is likely to remain for some time," the OPEC oil cartel said in its official statement.
OPEC also said that crude volumes entering the market are still in excess of actual demand and that crude stocks remain high.
Analysts at Commerzbank said in a note that "the current oil price movements should not be taken for granted and be viewed as a one-way street."
"The oil price faces downside risk insofar, as hopes of a demand recovery could potentially be disappointed and OPEC member states may decide unilaterally to expand their production due to higher oil prices," they said. The analysts expect oil prices will reach $70 by year-end.
Reformulated gasoline for June delivery rose 2 cents, or 1%, to $1.93 a gallon and June heating oil futures gained 3 cents, or 2%, to $1.63 a gallon. Both contracts will expire at the end of trading today.
Natural gas for July delivery rose 12 cents, or 3%, to $4.07 per million British thermal units.
