Oil bounces back above $70

26 June 2009

Crude oil prices bounced back from recent losses on Thursday as hopes of economic recovery and tightening stockpiles helped push prices above $70 (£42.49) a barrel.

The US government published a new report which showed that the country's economy retracted by an annual 5.5 per cent between January and March - slightly less than the 5.7 per cent previously predicted.

This helped fuel strong gains on the stock market and brought an end to several days of losses for oil prices.

Values were also boosted by further rebel attacks on oil facilities in Nigeria, which forced a number of companies to cut production over the past month, suggesting that stockpiles could begin to tighten this summer.

US crude for August delivery rose by $1.56 to settle at $70.23 a barrel, while London Brent crude settled at $69.78 a barrel - up $1.45 on the previous day.

According to the International Monetary Fund's chief economist Olivier Blanchard, oil prices are unlikely to rise much beyond $70 a barrel in the coming months.

He said the recent rally is driven largely by speculation and is unlikely to be maintained.

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