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Oil hovers at $53 as traders eye possible recovery

Oil hovers at $53 as traders eye possible recovery

Oil prices hovered around $53 a barrel Monday as investors awaited the results of the U.S. government's stress tests into its leading financial institutions and key U.S. unemployment data later in the week.
Consensus is growing among traders that perhaps the global economy, led by the U.S., has bottomed and turned the corner toward a recovery, and that has helped oil prices rally above $50 a barrel in recent trading sessions.
The renewed strength in oil prices has come in tandem with gains in world stock markets. Since March 9, the Dow Jones industrials are up 25.4 percent and the Standard & Poor's 500 index is up 29.7 percent _ further gains are expected at the U.S. open later especially after big gains in Asia earlier carried through into Europe.
Benchmark crude for June delivery slipped 9 cents to $53.11 a barrel by noon in European trading on the New York Mercantile Exchange. The contract Friday rose $2.08 to settle at $53.20.
Vienna's JBC Energy noted that the market has reacted to "hopes that the intensity of the recession in the U.S, could be calming," along with "expectations of positive housing and banking data," due for release in the coming days.
Two key indicators of the economy's health that investors will be eyeing this week are the U.S. government's assessment of the health of 19 big banks on Thursday and April employment data on Friday. American employers cut 663,000 jobs in March sending the unemployment rate up to 8.5 percent, the highest level in more than 25 years.
"Markets are certainly becoming more optimistic about the international economic outlook, and that's reflected in stocks and commodities, including oil," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney.
However, large crude inventories and slumping demand continue to drag on prices, which have traded around $50 a barrel for about a month.
"Inventories are still at very high levels, and while gasoline demand has leveled, distillate fuel demand is still very weak," Moore said.
The Organization of Petroleum Exporting Countries meets May 28 to discuss a potential production cut. OPEC has announced 4.2 million barrels a day of output quota reductions since September, but left production levels unchanged at its last meeting in March.
"If prices stay near where they're at, the market will expect OPEC to leave production targets where they are, and make more noise about compliance of existing cuts," Moore said.
In other Nymex trading, gasoline and heating oil for June delivery both gained less than a penny to fetch $1.52 a gallon and $1.39 a gallon. Natural gas for June was up slightly at $3.55 per 1,000 cubic feet.
In London, Brent prices rose 18 cents to $53.03 a barrel on the ICE Futures exchange.
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Associated Press writer Alex Kennedy contributed to this report from Singapore.


Updated : 2020-12-02 03:01 GMT+08:00