* Saudi Arabia says world economy can handle $75-$80 oil
* U.S. housing data better than expected
* Dollar rises, U.S. stock markets slip
* Japanese exports show modest signs of recovery
(Updates prices, market activity; new dateline, previously
LONDON)
NEW YORK, May 27 (Reuters) - Oil prices rose to a six-month
high above $63 a barrel on Wednesday after Saudi Arabia, OPEC's
biggest member, said the global economy had strengthened enough
to cope with oil at $75-$80 a barrel.
U.S. crude oil for July delivery <CLc1> rose 58 cents to
$63.03 a barrel by 1600 GMT after hitting $63.45, the highest
level since mid-November. London Brent crude <LCOc1> rose 79
cents to $62.02 a barrel.
Saudi Oil Minister Ali al-Naimi, speaking on the eve of a
meeting of the Organization of Petroleum Exporting Countries in
Vienna, said oil prices would continue to rise and that the
economy was now strong enough to support $75-$80 oil.
"The price rise is a function of optimism, better things
are coming in the future," Naimi told reporters in Vienna.
The minister said OPEC did not need to change its output
policy, which has already seen the group agree to remove 4.2
million barrels per day of oil from the market in a bid to
shore up prices battered by recession.
The U.S. Energy Information Administration reacted to the
Saudi comment, saying higher oil prices would be detrimental to
the economic recovery.
"I certainly would think that we are still in some pretty
thick economic woods and that it would make sense to not to
push things with respect to oil markets," said acting Energy
Information Administration head Howard Gruenspecht.
[]
Bolstering the market, U.S. housing data showed the pace of
sales of existing homes in the United States rose 2.9 percent
in April, supporting views that the three-year housing
recession was near a bottom.
But weakness in the U.S. stock market tempered oil's
strength. Wall Street shares declined amid gloom around General
Motors as it inched closer to bankruptcy.
"Everyone talks about green shoots but we're not completely
out of the woods -- to see a real price rally we'll need to see
a larger pick-up in demand," VTB Capital analyst Andrey
Kryuchenkov said.
Global oil demand is seen falling this year at the fastest
rate since 1981, with the International Energy Agency, adviser
to 28 industrialised nations, predicting a decline of 2.56
million barrels per day.
Crude inventories have risen to around 62 days of forward
cover, but U.S. inventories have been declining in recent weeks
due to a slowdown in import levels.
Analysts expect data this week to show another decline in
U.S. stockpiles, this time by some 1.1 million barrels,
according to a preliminary Reuters poll. []
Data from the American Petroleum Institute has been delayed
by one day until Wednesday afternoon due to the U.S. Memorial
Day holiday at the start of this week, while U.S. Energy
Information Administration report will be released Thursday .
Prices also shot above the key technical level of the
200-day moving average for the first time in more than eight
months, adding to some analysts' convictions that oil has found
a new price floor at $60 and may rise toward $65.
(Additional David Sheppard in London, Ayesha Rascoe in
Washington, Fayen Wong in Perth; Editing by David Gregorio)
