Brent Crude Steadies Below $118, Supported by Global Growth Hopes
Brent crude rose slightly toward $118 a barrel on Monday, underpinned by expectations of improving global growth despite some weak U.S. data dampening prices at the end of last week. Tensions in the Middle East also lent support.
Trading volume was limited as the U.S. market was closed due to the Presidents' Day holiday and as the International Petroleum (IP) Week, a gathering of industry professionals, kicked off in London, analysts said.
"With the U.S. holiday and the start of the IP Week, a lot of people will be away from their desks," Olivier Jakob, analyst at Switzerland-based Petromatrix, said.
U.S. economic data on Friday suggested the world's largest oil consumer hit a bump on its road to recovery in January with industrial production fell and manufacturing off to a weak start. But a rebound in factory activity in New York state in February may indicate any setback would be temporary.
"The U.S. economy is still heading to an upside and it should support the global economy and equity markets," said Tetsu Emori, a commodities fund manager at Astmax Investments in Tokyo.
"The Chinese should be back in market this week and its economy is also heading to an upside that should support commodities."
Brent crude was down 20 cents at $117.46 a barrel by 1518 GMT after posting its first weekly loss since the first half of January. U.S. crude slipped 24 cents to $95.62. following a small gain last week. Oil trading volumes are likely to be lean with U.S. investors away for a public holiday.
In the Middle East, sanctions on Iran are still curbing supply from the third-largest OPEC producer.
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Talks between Iran and major world powers on Tehran's nuclear program remained deadlocked and investors are looking ahead to another meeting on Feb. 26 for any signs of progress.
"At the end of this week you might start seeing positions being reviewed in view of next week's talks," Jakob said.
Major powers planned to offer an easing of sanctions on trading gold and other precious metals with Iran, in return for Iranian steps to shut down the nation's newly expanded Fordow uranium enrichment plant, Western officials told Reuters.
Iran criticised the proposal on Monday. A senior Iranian lawmaker rebuffed the idea.
A sharp cut in Saudi Arabia's crude output and exports has also supported Brent. Exports from the world's top crude oil exporter fell for the third month running in December, but the fall in shipments was less dramatic than the drop in oil production, official data showed.
The euro and the dollar gained against the yen on Monday after financial leaders of the world's biggest 20 economies vowed not to devalue their currencies to boost exports, in a bid to defuse currency wars.
Investors will focus later this week on the euro area's Purchasing Managers' Indexes for February and German sentiment indices.
Analysts expect the euro area flash PMIs, which point to economic activity around six months out, to show growth stabilizing rather than a clear end to the recession across the region.