SINGAPORE (Bloomberg) -- Crude oil is poised for its biggest monthly gain in five months after a report on Thursday showed the U.S. economy may have emerged from its longest contraction in more than 60 years.

Crude pared some of those gains on Friday on speculation that demand hasn’t kept pace with this month’s 13 percent price rally. U.S. inventories of distillate fuels such as diesel and heating oil remain 29 percent above their five-year average, according to the Energy Department, despite an annualized expansion of 3.5 percent in GDP in the third quarter.
“It’s going to be a rocky road ahead for real demand growth,” said Andy Sommer, an analyst at Elektrizitaets- Gesellschaft in Dietikon, Switzerland. “We still have that huge inventory overhang. The trend towards the end of the year should not be above $80 but back down towards $70.”
Crude oil for December delivery traded at $79.71 a barrel, down 16 cents in electronic trading on the New York Mercantile Exchange at 9:14 a.m. London time. On Thursday, the contract rose $2.41 to $79.87 a barrel. Futures, up 79 percent so far this year, are set to gain 13 percent in October, the biggest monthly rise since a 30 percent rally in May.
Oil rose 3.1 percent on Thursday, the most in two weeks, after the U.S. Commerce Department reported the third-quarter expansion in the world’s largest energy-consuming country. In the 12 months to June, the U.S. economy shrank 3.8 percent, the worst performance in seven decades. The four quarterly decreases marked the longest stretch of declines since quarterly records began in 1947.
---------------‘Growth is there’
“The GDP numbers really came out of the gate,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “Growth is there. Four quarters of negative growth are well and truly out of our way.”
The number of Americans collecting unemployment insurance fell more than forecast to the lowest level in seven months, a government report on Thursday showed. Continuing claims for jobless benefits were down 148,000 at 5.8 million in the week ended Oct. 17, the lowest level since March 21 and biggest weekly drop since July, according to the Labor Department.
“There was a whole string of positive economic news from Europe, Japan, to the U.S., and the dollar was down,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “Last night was a strong night for commodities across the board.”
------------Price survey
Crude oil may fall next week on speculation the dollar will rebound against the euro and equities may pull back, according to a Bloomberg News survey.
Fifteen of 34 analysts and traders, or 44 percent, said futures will drop through Nov. 6. Ten respondents, or 29 percent, predicted the market will rise and nine forecast prices will be little changed. Last week, 50 percent of survey respondents said oil would fall.
Brent crude for December settlement traded at $77.75 a barrel on the London-based ICE Futures Europe exchange, slipping 29 cents at 9:11 a.m. in London. On Thursday, the contract settled at $78.04 a barrel, up $2.18, or 2.9 percent, the most since Oct. 21.