Oil tops $58 in surprise rally

Oil prices have risen above $58 (£38.60) for the first time in six months despite falling global demand and record stockpiles causing severe storage capacity shortages worldwide.

Benchmark crude for June delivery settled at $56.71 after rising by 37 cents in trading on the New York Mercantile Exchange on Thursday. The contract had earlier reached a high of $58.57. In London, Brent prices settled at $56.47 on the ICE Futures exchange.

Says Phil Flynn, an analyst at Alaron Trading: "We have events coming together that can drive energy prices higher in spite of the plush supplies we have. We have a market that's fixated on the prospects of a much-faster-than-expected global economic recovery."

That said, most experts are saying that in the current economic climate it will probably be some time before oil consumption rebounds, although petrol and diesel demand may spike as summer drivers are tempted to hit the road.

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