Oil holds above 60 dollars in Asian trade

Oil prices held above 60 dollars a barrel in Asian trade Friday on signs of rising energy demand in the United States, a key growth engine for the world economy.

In afternoon trade, New York's main futures contract, light sweet crude for delivery in July, was up 37 cents to 61.42 dollars a barrel.

Brent North Sea crude for July delivery advanced 50 cents to 60.43 dollars.

"The market is sort of following the pattern over the last few weeks... the bullish sign is that we've seen two consecutive weeks of falling inventories in the US," said Tony Nunan, an energy risk manager at Mitsubishi Corp in Tokyo.

Data released Wednesday showed that crude reserves in the world's largest energy consumer tumbled by 2.1 million barrels in the week ending May 15, far more than market expectations for a 700,000 barrel drop.

The fall in inventories indicated that energy demand was holding firm despite a deep recession in the United States, the world's biggest economy and the largest oil consumer.

However, analysts warned that current price levels were not in line with the weak global economic conditions.

"If you have a look at the fundamentals in the market at the moment, the inventories in the US is still at 19-year highs, and there's no real indication that demand has re-entered the market yet," said Ben Westmore, an economist at the National Australia Bank. New York crude oil had rocketed to six-month highs of 62.26 dollars on Wednesday after data showed a fall in key US oil inventories.

Oil hit record highs above 147 dollars in July last year before the global financial crisis accelerated in the final months of 2008, pushing the world economy into recession and slashing energy demand. SingPORE, AFP