NEW YORK (CNNMoney.com) -- Oil prices edged higher Thursday as investors focused on signs the U.S. economy, the world's largest consumer of crude, is on the mend.
Light, sweet crude for June delivery was up 23 cents to $51.20 a barrel on the New York Mercantile Exchange. Oil surged more than 2% in the previous session.
The advance comes as stock prices rose sharply around the world. On Wall Street, the Dow Jones industrial average was up more than 1% in morning trading.
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.
Stocks rallied in response to 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.
Still, the price of 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.
On Wednesday, the government 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, investors are concerned that a potential swine flu pandemic will destabilize the already fragile global economy.
"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," said Peter Beutel, an analyst at Cameron Hanover, in a research note. 
