London: Oil climbed above $53 a barrel on Monday, extending the previous session’s four percent gains, after data out of big fuel consumers China and India stoked expectation economic recovery was gaining traction.
US crude futures for June delivery rose 21 cents to $53.43 a barrel by 2:45pm. London Brent crude rose 38 cents to $53.23.
Strong gains on Friday had been spurred by improved US consumer confidence, as well as a Reuters survey that showed Opec oil supply had fallen for an eighth consecutive month.
The market held firm on Monday after surveys showed the manufacturing sectors in China, the world’s second biggest fuel consumer after the United States, and India had grown for the first time in months in April.
Renewed economic optimism helped to drive Asian stocks to seven-month highs on Monday.
The FTSEurofirst 300 index of top leading shares in April posted its biggest ever monthly rise and was again higher on Monday, although a public holiday in Britain limited trade.
“We started to look at the green shoots in the United States and now we’re starting to look at what I like to call the bamboo shoots,” said Olivier Jakob of Petromatrix.
Oil prices have hovered around $50 a barrel for much of this year, nearly $100 below an all-time high hit last July.
But the market has recovered from a trough of $32.40 touched in December, the lowest level since early 2004. Output cuts from the Organization of the Petroleum Exporting Countries have helped to push the market higher.
An Opec survey on Friday showed Opec had delivered around 84% of promised curbs of 4.2 million barrels per day since September, around its highest ever level of output discipline.
Opec efforts to support the price have been in part offset by the impact of high inventories on land and large amounts of floating storage as traders have made use of a bearish market structure to stockpile oil.
The market could also be undermined this week depending on the results of US government bank stress tests, which will be released to the banks on Tuesday and to the public on Thursday.
“A negative report could potentially cause a substantial pullback in the equities and energy markets,” said Ben Westmore, a commodities analyst at National Australia Bank.