23/05/2009
LONDON, May 21 (Reuters) - Oil fell more than a dollar to below $61 a barrel on Thursday, after hitting a six-month high in the previous session on expectations of a rebound in the world economy.
U.S. crude for July delivery was down $1.49 a barrel at $60.55 by 1415 GMT. It had settled at $62.04 a barrel, before trading up to a six-month high of $62.26 in post-settlement activity. London Brent was down $1.26 at $59.33.
Oil has nearly doubled since December, despite weak demand and high fuel inventories due to the global economic downturn. Prices have risen by about a third in the past four weeks.
A rally in equity markets has partly inspired oil's gains in anticipation of a recovery in world economic growth and oil consumption.
"While it may seem at odds with recent demand data and high levels of global inventories, we believe the economic outlook is improving and a second-half recovery, perhaps more vigorous than even we foresee, is on the cards," JP Morgan said in a note.
The bank also raised its 2009 and 2010 oil price forecasts, looking for $55.63 a barrel in 2009 against a previous forecast of $49.38. It raised its 2010 forecast by an even larger $10 to $67.50 a barrel.
But bullish investor sentiment about the global economic outlook showed signs of moderating after credit rating agency Standard & Poor's cut its outlook on the United Kingdom to negative from stable.
This knocked European equity markets, ending a five-day advance.
Wall Street stocks opened lower in response to signs of further U.S. labour market weakness and after Britain's rating downgrade.
The number of U.S. workers filing new claims for jobless aid fell by 12,000 to 631,000 in the week to May 16 versus analysts' forecasts for 630,000 new claims. Ongoing claims hit a new record.
"We have become more confident that global activity is nearing the turning point," Citi oil analysts said in a research note. "Nevertheless, we still expect that the pace of global recovery will be subdued," it said.
"The widespread global plunge in activity and credit availability remains a drag on global trade."
The Organization of Petroleum Exporting Countries, which has agreed to cut 4.2 million barrels per day of output since September in a bid to prop up oil prices, will meet on May 28 to discuss output policy.
Eleven out of 12 oil analysts and economists surveyed by Reuters predicted OPEC would maintain output. (Reporting by Jane Merriman in London; Editing by Anthony Barker)
