Oil was steady under $50 a barrel on Thursday, after surging more than 2 percent earlier as equity markets rallied on signs the US recession was easing, boosting hopes of a demand recovery in world's top energy user. The market will be eyeing US weekly jobless claims, due later in the day, for further signs that the speed of contraction in the economy was abating.
Guardedly positive comments on the US economy from the Federal Reserve's Beige Book report outweighed bearish government data showing that US crude inventories last week rose to the highest level in nearly 19 years, sparking a rally on Wall Street overnight and Asian shares on Thursday. But oil pared some gains after China released mixed economic data.
The world's second-largest energy consumer said its economy grew a slower-than-expected 6.1 percent in the first quarter, but also showed improvements in March, providing tentative signs that the worse may be behind. By 0730 GMT, US crude for May delivery was up 40 cents at $49.65 a barrel, after rising to $50.30 earlier. ICE Brent crude for the new front-month of June was up 56 cents at $53.00 a barrel.
The Energy Information Administration's (EIA) weekly inventory report showed a 5.6 million-barrel rise in US crude stocks, to 366.7 million barrels - the highest since September 1990 - beating analysts' expectations of a 1.9 million-barrel build. The Fed's Beige Book showed that the US economy continued to weaken in March and early April, but the pace of decline was easing amid scattered signs the country's recession may be nearing an end.
US jobless claims, due at 1230 GMT, are forecast to hit a total of 655,000 new filings, versus 654,000 in the prior week, a Reuters poll of economists showed. Crude prices have tumbled nearly $100 per barrel since last July, as the global recession dented oil demand, but they have recovered in recent months from a low of $32.40 in December. Both the International Energy Agency (IEA) and US government agency EIA have also just cut their global demand forecasts.