Oil slipped below $52 a barrel today in Asia after surging overnight on investor optimism crude demand will soon rebound if the US recession has bottomed.
Benchmark crude for May delivery fell 72 cents to $51.92 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. The contract rose $4.25 yesterday to settle at $52.64.
Oil prices have bolted from below USD 35 a barrel six weeks ago, riding a wave of improving investor sentiment that the worst of the US recession may be over. Crude prices have mirrored a surge in stock markets, w ith the Dow Jones industrial average up more than 20 per cent during the last month.
"At this point, it's more momentum than fundamentals," said Gerard Rigby, energy analyst with Fuel First Consulting in Sydney. "People are expecting oil to jump over the next 12 to 24 months."
Investors brushed off evidence this week that US crude inventories are at a 16-year high.
Crude inventories grew by 2.8 million barrels, or 0.8 per cent, for the week ended March 27, the Energy Department's Energy Information Administration said in its weekly report on Wednesday.
Oil stockpiles have not been this high since July 1993 and are 15.5 per cent above year-ago levels.