Perth: Oil prices rose over half a percent on Monday, recouping the previous session’s losses as the dollar weakened and positive Asian economic data helped to brighten the global economic outlook.
US crude for May delivery rose 55 cents to $80.55 a barrel by 11:32am. The contract settled down 53 cents at $80.00 per barrel on Friday, bringing weekly losses to 0.84 percent.
London Brent crude gained 52 cents to $79.81.
“Oil prices are mostly getting a lift from the weaker dollar. We’ve also seen a fairly upbeat macro sentiment across the market in recent weeks that is lending support to oil,” said Toby Hassall, an analyst at CWA Global Markets in Sydney.
The dollar index was down 0.28% at 81.44 against a basket of currencies, while the euro trimmed early gains after a jump on short covering by investors.
Positive economic data from Japan and South Korea also alleviated some of the concerns about slowing momentum in the global economy and buoyed investors’ risk appetite.
Japanese retail sales jumped the most in 13 years in the year to February due to oil price rises and the lingering effect of government stimulus, while South Korea’s current account swung back to a surplus in February on brisk exports.
Having traded intraday above $80 for the past 27 trading sessions, some traders said oil prices appear to be ready for a breakout from current levels.
However, with crude oil demand fundamentals continuing to clash with positive macroeconomic data, prices could struggle to break above $84 -- a level they have failed to breach this year.
“Given the anaemic demand recovery in the US and Europe, the underlying crude demand fundamentals do not warrant an extension of last year’s sharp rebound,” CWA’s Hassall said.
While short-term worries about Greece’s fiscal health have eased, concerns about other fiscally vulnerable economies in the region such as Portugal and Spain could push oil prices lower.
Oil prices could stay in the $70-80 range over the next decade, according to a report by Opec released ahead of a major oil conference this week that reiterated demand forecasts made last year.
All eyes this week are on the US non-farm payrolls data due out on Friday. The consensus is for a gain of 190,000 jobs in March, the second month of jobs growth since the recession started in December 2007, and the largest increase since March of that year.
On the geopolitical front, Canada will press the Group of Eight leading industrialized nations to tighten United Nations sanctions on Iran when it hosts a meeting of foreign ministers from the grouping on Monday and Tuesday.
President Dmitry Medvedev said on Saturday he still supported diplomacy to resolve the dispute over Iran’s nuclear programme but sanctions should not be ruled out.
Momney managers cut their net long position in crude oil futures on the New York Mercantile Exchange in the week through 23 March, the Commodity Futures Trading Commission said on Friday.