* Oil hits 6-month high of $65.70
* Japan factory output jumps, stimulus boosts demand
* Japan April crude imports down 22.5 pct
* U.S. data shows surprise 5.4 million bbl crude stocks
fall
(Adds Japan's crude imports data)
By Fayen Wong
PERTH, May 29 (Reuters) - Oil rose to a new six-month high
above $65 a barrel on Friday, on track for its largest monthly
percentage gain in more than a decade, after government data
showed a surprisingly sharp drop in U.S. crude inventories and
OPEC left output steady.
Oil prices have jumped 28 percent this month, buoyed by
hopes of a global economic recovery later this year and a
bullish price outlook from OPEC kingpin Saudi Arabia.
U.S. crude oil for July delivery <CLc1> rose 48 cents to
$65.60 a barrel by 0700 GMT, after earlier touching $65.70, a
level unseen since Nov. 5. The contract, which has risen about
5 percent this week, settled up 2.6 percent at $65.08 on
Thursday.
London Brent crude <LCOc1> gained 34 cents to $64.73.
"The market seems to be focusing strongly on the bullish
sentiment and the brighter macroeconomic outlook, but it's a
little doubtful whether the demand fundamentals can continue to
support oil prices at such levels," said David Moore, a
commodities analyst at the Commonwealth Bank of Australia.
Signs of an uptick in demand are emerging in the United
States and Japan after the sharpest downturn in decades,
prompting companies to revive production and investors to buy
shares, despite lingering concerns over mounting Western
government debt. []
Another bright spot was U.S. crude stocks, which fell by
5.4 million barrels in the week to May 22, the U.S. Energy
Administration said, way above analysts' expectations in a
Reuters poll for a 700,000 barrel decline, as refiners ramped
up output ahead of the summer driving season. []
Gasoline inventories also dropped for the fifth week in a
row as demand rose in the week preceding the Memorial Day
holiday, which traditionally marks the start of the summer
driving season in the U.S.
OPEC's decision to hold production steady helped prop up
prices.
The producer group on Thursday kept its output targets
unchanged as the market had expected, betting on a
strengthening world economy and tentative signs of increased
demand.
(For a list of stories on the OPEC meeting, click
[])
Analysts said Saudi Arabia's rare forecast this week that
oil prices could reach $75 a barrel later this year represented
a distinct policy shift from the world's largest oil producer,
which has until recently been hinting that it would be happy
with a lower price to help the world economy back on its feet.
"Taken in this light, Saudi's statement clearly represents
a policy shift from a priority on the economy to a view that
higher prices are not something that Saudi Arabia will stand in
the way of," JP Morgan's energy analyst, Lawrence Eagles, said
in a note.
But in a sign that global oil demand was still fragile,
crude imports from Japan, the world's No.2 energy consumer,
fell 22.5 percent in April from a year earlier, while the
country's largest refiner Nippon Oil Corp <5001.T> said it
planned to refine about 4 percent less crude oil in June
compared with a year ago. [][]
Investors will be keeping a close watch on economic data
due later, including U.S. first-quarter preliminary GDP figures
and Reuters/University of Michigan May consumer sentiment.
[]
(Editing by Ben Tan)
