* Oil hits six-month high of $66.25
* Japan factory output jumps, stimulus boosts demand
* U.S. data shows 5.4-million-barrel crude stock fall
(Adds quote, detail, updates prices)
By Christopher Johnson
LONDON, May 29 (Reuters) - Oil rose to a six-month high
above $66 per barrel on Friday, on track for its largest monthly
percentage gain in more than a decade, after Japanese and U.S.
data suggested the economic downturn may be moderating.
Oil prices have jumped around 30 percent this month, buoyed
by expectations of a global economic recovery later this year
and a bullish price outlook from key OPEC member Saudi Arabia.
It is the largest monthly price rise since March 1999.
U.S. crude oil for July delivery <CLc1> was up $1 at $66.08
per barrel by 1122 GMT, after reaching a high of $66.25, its
highest level since early November last year.
London Brent crude <LCOc1> gained 92 cents to $65.31.
Data on Friday showed Japanese industrial production rose
5.2 percent in April on a monthly basis, and the government said
it expected continued gains through June. []
Better U.S. durable goods orders figures on Thursday also
reinforced the sense that the global economic slump might be
abating, despite a disappointing U.S. home sales report and
lingering concerns over mounting Western government debt.
"Oil prices are rising despite weak current fundamentals,"
said David Hufton, managing director of brokers PVM in London.
"They are going up because speculators are hopeful that a
bottom has been reached and an economic recovery is about to
take place which will be V rather than W, U or L-shaped."
U.S. DATA
Another supportive influence was a report by the U.S. Energy
Information Administration on U.S. crude oil stocks, which fell
5.4 million barrels in the week to May 22, way above analysts'
expectations in a Reuters poll for a 700,000 barrel decline, as
refiners raised output before the summer driving season. []
Gasoline inventories also fell 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 United States.
"The market has reacted to the headline figures," said Harry
Tchilinguirian, analyst at BNP Paribas in London. "That has
helped extend technical buying as we moved above the
psychologically important 200-day moving average (MA)."
The front month for U.S. crude oil futures crossed up
through its 200-day MA on its daily price chart on Tuesday and
it is now acting as a strong support, according to technical
analysts who track prices on charts.
OPEC's decision to hold oil production steady also 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 stories on the OPEC meeting, click [])
Analysts said Saudi Arabia's statement this week that the
global economy could now cope with $75-80 a barrel oil was a
shift from the world's largest oil producer, which has until
recently hinted it would be happy with a lower price to help the
world economy back on its feet.
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. []
(Additional reporting by Fayen Wong in Perth; editing by Keiron
Henderson)
