Oil prices may ease this week as the focus returns to a favorable outlook for supply, even as recent data suggests China's economy is stabilizing and signs emerge that a political compromise may be reached to avoid massive U.S. fiscal tightening.
Half, or four out of eight of respondents expect oil prices to fall this week, two forecast price gains, while the remainder expect prices to hold at current levels, CNBC's weekly survey of market sentiment shows.
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The focus was expected to remain on the U.S. "fiscal cliff," which refers to the tax hikes and spending cuts that kick in at the end of the year unless Congress can reach a deal. Concerns about the "fiscal cliff" knocked risk appetite last week.
A senior Republican senator voiced confidence on Sunday that U.S. lawmakers would forge a deal on the "fiscal cliff," while a top aide to President Barack Obama signaled willingness to compromise over raising tax rates on the rich, Reuters reported on Sunday.
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"The outlook is getting better as clarity replaces political lunacy," said David Kotok, Chairman & Chief Investment Officer at Cumberland Advisors.
Meanwhile, Chinese industrial production, investment and retail sales all accelerated in October, suggesting that the world's second-largest economy has ended a slowdown that has lasted almost two years, data on Friday showed.
"China has slowed to a more sustainable growth path," Clifford Bennett, Chief Economist of Orb Global Investments in Sydney told CNBC's 'Squawk Box' on Monday.
Although macro-economic and fiscal challenges appear a little more manageable, oil traders continue to point to ample supplies and weak demand as factors that will continue to weigh on prices.
U.S. crude oil production climbed 8,000 barrels a day to 6.68 million barrels a day, the most since December 1994, Energy Department data showed last week. Crude inventories remain above 5-year highs, noted Societe Generale's Mike Wittner.
U.S. crude futures for December traded at $86.09 a barrel in Asian trade on Monday, while Brent crude for December slipped 19 cents to $109.21 a barrel.
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Dhiren Sarin, Chief Technical Strategist for Asia-Pacific at Barclays Capital said U.S. equity markets would continue to set the tone for risk assets such as oil. The S&P 500 stock index fell sharply last week as investors shifted their focus to a looming fiscal showdown in Congress after President Barack Obama's re-election.
"We prefer to see stronger basing signs in the S&P 500, if oil is to recover sustainably," said Sarin, who has a 'bearish' recommendation for oil this week.
—By CNBC's Sri Jegarajah