Crude Supported by Weak Dollar, Stocks Despite Growth Woes
U.S. crude oil prices extended gains by more than $1 per barrel on Monday driven by a weaker dollar and overall stronger commodities prices, brokers and analysts said.
The euro rose against the U.S. dollar supported by Italy's new Prime Minister Enrico Letta saying his government would push to end economic austerity and job growth.
Copper and gold edged higher on prospects of further monetary easing in the United States and Europe, supporting oil prices, market makers said.
U.S. light, sweet crude for June delivery was trading more than $1 higher above $94 per barrel, not far from the day's highs.
Brent crude oil held steady just below $104 per barrel, narrowing the spread between the two.
The differential between the international benchmark and U.S. West Texas Intermediate (WTI) fell further below the $9.77 hit last Thursday, the first time it had fallen below $10 since January 2012.
Brent's premium to U.S. oil was last trading around $9.50.
Oil rallied from nine-month lows last week on expectations that stronger global economic activity would encourage more fuel consumption and this lured some investors back into the market.
"There's been a re-establishment of some long positions by funds after they exited them following the sharp falls," said Christopher Bellew, broker at Jefferies Bache.
Brent is more than 6 percent below its starting point in April, pressured by data suggesting the global economy remains on a fragile footing at best.
"First-quarter (U.S.) GDP really disappointed, and as long as unemployment stays high, the U.S. Federal Reserve is going to have to keep its backstop on the economy with quantitative easing," said Ben Taylor, sales trader at CMC Markets.
Traders will focus on China this week, with the world's second largest oil consumer's manufacturing data for April expected to edge up from March, a Reuters poll found.
A private sector survey of purchasing managers sponsored by HSBC last week showed activity in China's industrial sector dipped in April as new export orders shrank, spooking investors.
"There has been some concern that with an unstable Europe being one of China's biggest export markets, this could have a negative impact on the PMI number," Taylor said.
"Europe is in a really bad place at the moment, you get the sense that everyone has really given up on it and is focusing on other places to drive global growth."
The Federal Reserve is expected to keep buying $85 billion worth of bonds per month when it meets this week, with the decision announced at 1815 GMT on Wednesday.
The European Central Bank will probably cut interest rates when it meets on Thursday, a Reuters poll showed, but the step is seen doing little to pull the euro zone out of a recession.