Oil rally seen as short-lived

Oil prices rallied Thursday, but market participants characterized the jump as a short-term bounce that was unlikely to last.

Prices of US benchmark West Texas Intermediate for delivery in May gained $1.05 to close at $87.73 a barrel on the New York Mercantile Exchange.

European benchmark Brent futures closed at $99.13, up $1.44.

Oil prices have been in almost uninterrupted retreat since hitting $97.23 per barrel on March 20.

Like other commodities, oil has also been in a downward pattern this week after gloomy Chinese economic data raised doubts about global demand. Markets have also been perturbed by mixed earnings reports and a lower economic outlook from the International Monetary Fund.

Ray Carbone, a broker and trader with Paramount Options, characterized Thursday's jump as "a short-covering bounce."

"In general, the market is still weak," Carbone said. "Markets cannot continue straight down every day."

Carbone also expressed concern at copper prices, a proxy for global demand that has been in decline most of this week due to the weak China figures.

Gene McGillian, a broker and trader at Tradition Energy, said Thursday's economic reports from the Philadelphia Federal Reserve Bank on manufacturing and the Conference Board on leading economic indicators were disappointing.

The market continues to be dominated by lofty supplies and meager demand, and more weakness is possible, said McGillian.

"The factors that drove the market down to $85 are still overhanging. We're going to continue to watch the economic factors about whether things are deteriorating again."

jmb/adm