* Oil rises above $51 to highest level since Dec. 1
* U.S. dollar declines after falling most since 1985
* U.S. workers on jobless benefits at record high
* Saudi Arabia says hopes for gradual rise in oil prices
(Adds U.S. jobs data, quotes)
By Alex Lawler
LONDON, March 19 (Reuters) - Oil jumped more than 6 percent
to above $51 a barrel on Thursday after a move by the Federal
Reserve to buy government bonds hit the dollar and led to
expectations the U.S. economy could soon begin its recovery.
The Fed announced on Wednesday it would pump another $1
trillion into the U.S. economy by buying long-term government
debt for the first time since the 1960s and by expanding
purchases of mortgage bonds. []
"We have for the time being a return to risk appetite in the
oil market and it's based on the Fed's announcement yesterday,"
said analyst Mike Wittner of Societe Generale. "That's having a
positive impact on sentiment."
U.S. crude for April <CLc1> was up $3.33 a barrel at $51.47
by 1300 GMT, having earlier traded as high as $51.65, the
highest since Dec. 1, 2008. London Brent for May delivery
<LCOc1> rose $3.14 to $50.80.
Some other commodities also advanced as the Fed's plan
aroused expectations that demand may increase. Copper jumped
more than 5 percent to a four-month high.
The $50-mark has been the top of oil's trading range so far
in 2009. A close above that level is needed to increase the
prospect of a further rally, said analysts who use past price
moves to predict future direction.
U.S. jobs data were grim, highlighting the extent of the
downturn in the world's top oil consumer. The number of workers
drawing state unemployment benefits scaled another record high
early this month. []
Wittner added he did not expect oil to hold above $50 for
very long, despite the Fed's move.
"After this initial optimism fades, I don't think we'll stay
there as the focus will shift to whether these measures will
actually work.
"The simple fact is we're not going to know the answer to
that for some months."
WEAKER DOLLAR
The dollar eased against a basket of currencies on Thursday,
after posting its biggest daily fall since 1985. <.DXY> A weak
dollar can boost investor demand for oil and other commodities
priced in the U.S. currency.
Besides technical resistance, falling demand could also
limit oil's gains in the near term.
On Wednesday, oil fell after data showed U.S. crude
inventories ballooned to the highest in nearly two years and the
World Bank cut its 2009 forecast for China's economic growth.
In its weekly report, the U.S. Energy Information
Administration (EIA) said crude oil stocks rose 2.0 million
barrels to 353.3 million last week, double the increase forecast
by analysts.
Slumping demand and rising inventories have helped drag oil
down from a record high near $150 reached last summer as the
economic crisis hit consumption across the globe.
Analysts say oil, which sank below $33 in December, has
stabilised around $40 to $50 due to OPEC supply curbs of 4.2
million barrels per day, but the grim economic outlook is
standing in the way of a further advance.
The Organization of the Petroleum Exporting Countries
pledged to comply more strictly with its supply curbs at a
meeting on Sunday. It meets again to set oil output policy on
May 28.
Saudi Arabian Oil Minister Ali al-Naimi, the group's most
influential voice, said on Wednesday he believed OPEC had
managed to put a floor under the market. []
"I think OPEC has succeeded in stabilising prices," he said.
"The next thing is to hope for a gradual improvement in prices
over time."
(Additional reporting by Fayen Wong; Editing by James Jukwey)
