Oil prices inch higher

Click the chart for current oil prices.

Quick Vote

What do you think of the government's efforts to keep Chrysler going?

• It's doing what's appropriate
• It should be working harder
• It should do less and let Chrysler fold

or View results

NEW YORK (CNNMoney.com) -- Oil prices edged higher Thursday as investors looked past record high inventories and weak demand to focus on tentative signs of economic improvement.

Light, sweet crude for June delivery rose 15 cents to settle at $51.12 a barrel on the New York Mercantile Exchange.

Oil has hovered near $50 a barrel in recent sessions, down nearly $100 from last summer's all-time high, as global energy demand remains weak and inventory levels continue to rise.

In its monthly petroleum report, the Energy Information Agency said demand for crude oil fell to 18,706 barrels per day in February from 19,125 the month before.

That came one day after the EIA said U.S. crude supplies grew by 4.1 million barrels last week. Analysts were expecting an increase of 1.8 million barrels.

In addition to rising supplies and anemic demand, investors are concerned that a potential swine flu pandemic will destabilize the already fragile global economy.

Meanwhile, stocks held modest gains in afternoon trade as investors responded to the bankruptcy of Chrysler LLC and a big drop in Exxon Mobil's (XOM, Fortune 500) first quarter profit.

Stocks rallied earlier in the session on a slightly more upbeat economic outlook from the Federal Reserve. Signs that consumer spending rebounded in the first quarter even as the economy contracted also boosted optimism.

Many oil traders view the stock market as a proxy for the overall economy and a barometer of future energy demand. As a result, oil prices often rise and fall in tandem with the major stock indexes.

Peter Beutel, an analyst at Cameron Hanover, said the oil market will likely remain range bound as the grim outlook for supply and demand vie with signs the economic downturn is easing.

"We have had a number of contradictory signals recently, any of which could have been enough to generate massive buying or selling and a decisive escape from the mud-bound trenches that prices seem to be stuck in," Beutel wrote in a research note.