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Saudi's optimism boosts oil prices to a six month high

THE price of oil hit a six-month high yesterday, as Saudi Arabia said it was optimistic about the prospect of economic recovery.<br /><br />The news that crude oil was trading above $63 a barrel comes as OPEC prepares for an extraordinary meeting today to decide on output levels.<br /><br />Saudi&rsquo;s oil minister Ali al-Naimi said yesterday that oil prices would keep rising as demand was &ldquo;picking up.&rdquo; He said that the oil cartel did not need to cut production levels to help prices. He added that oil was likely to hit $75 a barrel by the end of 2009, as demand from Asia increased.<br /><br />But in spite of Saudi Arabia&rsquo;s renewed optimism, many traders in the physical oil market are far less sure that demand is improving significantly, with consumption still weak in the US and Europe. Oil watchdog, The International Energy Agency, sees oil consumption contracting this year by 2.6m barrels a day, the steepest fall since 1981.<br /><br />Oil has fluctuated massively in the past year, hitting a high of $147 a barrel last July, before plummeting to less than $34 a barrel in December. It has more than doubled in price since the start of the year.