SINGAPORE – Oil prices were steady on Monday, with traders saying the recent upward momentum was continuing as Japan emerged from recession and after U.S. oil drilling fell.
Japan’s economy rebounded from recession in the final quarter, and although the data was weaker than expected, the return to growth of Asia’s second biggest economy and energy user lent oil support, analysts said.
Benchmark Brent crude futures were trading at $61.50 per barrel at 0205 GMT (9.05 p.m. EST Sunday), virtually level with their last settlement. U.S. WTI crude was also flat at $52.78 a barrel.
Oil markets rose strongly last Friday after another drop in the U.S. rig count, pushing Brent back above $60 a barrel for the first time since December last year.
“Crude oil prices gained over 2 percent … on news of U.S. industry spending cuts and declining U.S. drilling. Baker Hughes rig data showed oil and natural gas drillers idled 98 rigs, bringing the total rig count to 1,358. A fire at a Libyan pipeline and a further escalation in tensions could provide additional short-term support,” ANZ bank said in a note.
Despite the price rises of the past two weeks, analysts say significant oversupply remains in oil markets as output stays high while demand is relatively low.
“We continue to believe that neither supply nor demand will respond materially near-term. On our estimates, global supply is running 1.4 million barrels per day above global demand in 1H15, up from 0.9 in 4Q14,” Bank of America Merrill Lynch said late on Friday in a statement.
“Thus inventory dynamics could continue to deteriorate in coming weeks, leading to downside pressure on near-dated contracts. We reiterate our view that Brent will trade below $40 per barrel over the next two months,” it added.
(Editing by Joseph Radford)
This article was written by Henning Gloystein from Reuters and was legally licensed through the NewsCred publisher network.