Oil price jumps above 56

NEW YORK -- Oil prices hit a five-month peak above $56 on Wednesday after a government report showed falling crude stockpiles in the United States, the world's biggest consumer of energy.

New York's main futures contract, light sweet crude for delivery in June, rose $2.50 from Tuesday's close to end at $56.34 per barrel.

It had jumped at one point to $56.47, the highest since mid-November.

In London, Brent North Sea crude for June delivery also rose to a level last seen in months, up $2.03 to $56.15 per barrel.

The market tone was bullish after the Energy Department's Energy Information Administration said that crude levels for the week ending on May 1 rose by 600,000 barrels to 375.3 million barrels.

Some analysts had expected a build-up of more than two million barrels in crude inventories.

The price jump may fizzle out as total stocks remain massive, analysts said.

While the increase in US crude stock was only 600,000 barrels, thanks to a sharp rise in refinery utilization rates, overall stocks of US oil and oil products rose in the week to May 1 by over 5.3 million barrels, noted Nic Brown of Natixis Bank.

"We think the market is at risk of an imminent disappointment," Brown said.

Prices also got a boost from fresh data showing the US private sector shed 491,000 jobs in April, fewer than expected by analysts, signaling the prolonged US recession may be easing.

The April figure based on a survey by payrolls firm ADP data was much lower than the 708,000 job cuts in March and the 645,000 expected by most analysts and the smallest private payrolls decline since October last year.

The data came a day after Federal Reserve chairman Ben Bernanke said that the US economy, which plunged into recession in December 2007, could rebound later this year, boosting demand for energy.

Crude futures on Tuesday began hitting multi-month highs on hopes of a recovery in energy demand, alongside rising stock markets.

At current price levels, oil remains massively below last July's record peaks above $147 a barrel, after slumping because of the economic downturn which is now showing signs of recovery.