* 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)
By Richard Valdmanis
NEW YORK, May 27 (Reuters) - Oil prices rose to a six-month
high near $64 a barrel on Wednesday after Saudi Arabia, OPEC's
biggest member, said the global economy had strengthened enough
to cope with oil at $75 to $80 a barrel.
U.S. crude oil for July delivery <CLc1> rose $1.25 to
$63.70 a barrel by 12:30 p.m. EDT (1630 GMT), after hitting
$63.82, the highest level since mid-November. London Brent
crude <LCOc1> rose $1.37 to $62.61 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
global 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. The group already has 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 by 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," the acting head of
the EIA, Howard Gruenspecht, said. []
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 industrial 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 the EIA's weekly
report will be released Thursday.
(Additional reporting by David Sheppard in London, Ayesha
Rascoe in Washington, Fayen Wong in Perth; Editing by Walter
Bagley)
