US crude settles at $59.63/barrel, up 1.79%

Oil jack pumps in the Kern River oil field in Bakersfield, California.
Jonathan Alcorn | Reuters

U.S. crude closed up 1.79 percent at $59.63 a barrel on Thursday, its highest settle of the year, helped by a weaker dollar and bets that a supply glut would ease.

After the June-till-January selloff that halved oil prices from highs above $100 a barrel, Brent and U.S. crude had their strongest recovery this month, gaining about $11 each, and hitting their highs for 2015.

was up 86 cents at $66.70 a barrel by 2:24 p.m. EDT, near a 2015 high of $66.93, which was reached earlier in the session.

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The gains came as the dollar fell to a February low, making oil less expensive to holders of other currencies.

Crude's percentage gains in April were the best since May 2009, when prices were just recovering from the financial crisis, and backed oil bulls' contention that the supply-demand imbalance would level.

Will the crude rally continue?

But some were skeptical of a smooth continuation to the rally, citing disappointing U.S. economic growth in the first quarter and signs that the Organization of the Petroleum Exporting Countries had no intention of slowing output.

OPEC supply was expected to have risen in April to its highest in more than two years, boosted by record or near-record supplies from Iraq and Saudi Arabia, a Reuters survey showed.

"It seems more likely that we will hit some speed bumps on this rally, given the unrelenting OPEC supply and the uneven U.S. economic data, which could cause dollar gyrations," said John Kilduff, partner at New York energy hedge fund Again Capital.

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The dollar came off its lows on Thursday after U.S. economic data showed consumer spending rose in March and jobless claims hitting 2000 lows.

A Reuters survey of 32 analysts predicted Brent would average $60 in 2015, up 80 cents from last month's survey, while U.S. crude was seen at $54.40 versus $53.60 previously.

U.S. oil inventories have been rising steadily for months but have begun to level off in recent weeks as domestic production eased and refinery demand picked up.

Tamas Varga, oil analyst at London brokerage PVM Oil Associates, said the U.S. crude market's fundamentals were strengthening but sentiment could turn after the huge April gains. "I think this is a rally to sell into."