Oil prices steadied Thursday, buoyed by hopes of a turnaround in the recession-hit American economy as traders looked past news that US crude stocks have hit their highest level since 1990.

In late afternoon trade, London's Brent North Sea crude for June delivery added 34 cents to reach 52.77 dollars per barrel.

New York's main futures contract, light sweet crude for delivery in May, eased 10 cents to 49.15 dollars a barrel.

Oil sank Wednesday on news that US crude reserves had hit the highest level for more than 18 years, indicating fragile demand in the struggling US economy.

But Wall Street shares opened higher Thursday as better-than-expected profits from JPMorgan Chase offered hope that the banking sector is on the mend and a drop in new US jobless claims lifted the mood.

Market action came as US banking giant JPMorgan Chase announced a net profit of 2.1 billion dollars in the first quarter of 2009.

Meanwhile the Labor Department said new US jobless claims fell by 8.0 percent to 610,000 in the past week, a third consecutive decline suggesting some easing of pressure in the weak labor market.

"Crude oil rose (Thursday) for the first time in a week as equities in the United States rallied and the Federal Reserve said some of the country's biggest regional economies slowed the pace of their decline," said BetOnMarkets analyst Dave Evans.

"Traders are hoping that to catch the bottom of the recession, and hoping that a slowing decline is a sign that the recovery is around the corner."

The Fed said Wednesday in its Beige Book survey that "overall economic activity contracted further or remained weak," although in some districts there were some signs that the downturn may be easing.

The US Department of Energy had said Wednesday that crude stocks surged 5.6 million barrels in the week ending April 10 to 366.7 million barrels -- which was the highest level since September 1990.

Meanwhile this week, the Organisation of the Petroleum Exporting Countries (OPEC) cut its estimate for world crude demand again, arguing that a "devastating contraction" in consumption would hit prices.

"In the coming months, the market is expected to remain under pressure from uncertainties in the economic outlook, demand deterioration and the substantial overhang in supply," OPEC said Wednesday in its latest monthly report.

The cartel estimated that demand would shrink by 1.37 million barrels per day (bpd), or 1.6 percent, in 2009.

In its previous monthly bulletin released in March, OPEC had seen a contraction of 1.01 million bpd for 2009.

"World oil demand is already out of its high-demand seasonality, achieving nothing but devastating contraction," it said.