LONDON—Crude-oil futures were broadly steady as the market paused after Monday's surge to 18-month highs.
"I think today's a natural breather after a strong upturn...[and] the stronger dollar is holding it back a bit," said Bjarne Schieldrop, chief commodities analyst at SEB Commodities in Stockholm.
Prices remain underpinned by "positive economic sentiment along with strong and solid demand from Asia," he added, while U.S. jobs and manufacturing data from late last week continued to buoy sentiment.
The front-month May Brent contract on London's ICE futures exchange recently was up $0.11 at $85.99 a barrel. The front-month May contract on the New York Mercantile Exchange was trading $0.05 higher at $86.67 a barrel. It settled Monday at its highest level since Oct. 8, 2008.
The ICE's gasoil contract for April delivery was up $3.25 at $724.25 a metric ton.
The oil market has potential to build on Monday's gains due to rising optimism over economic recovery, some market participants and analysts said.
"The stage is set for steady to higher prices in the coming months," said PVM Oil Associates, a London-based brokerage. It cited rising global manufacturing activity, lower U.S. jobless claims and other positive economic data as evidence of economic recovery, which should boost oil demand.
"Crude oil appears to have broken out of the $75-$85 a barrel band [and] above here the sky's the limit," said Stephen Schork, editor of the Schork report, also citing Friday's U.S. jobs data as a positive factor.
"Manufacturing jobs increase domestic energy demand, from the coal to fuel furnaces to the diesel to fuel freight transport," and the latest U.S. jobs figures suggest "the recovery is gaining momentum," he said.
Meanwhile, other analysts argued that fundamental factors remain still comfortable despite hopes for rising demand. U.K.-based KBC Energy Economics said that while investors have become more bullish about near-term prices, the decline in long-dated oil contracts reflects "a growing belief that there will be no real tightness in oil supplies for quite some time."
"While we can't discount the possibility of a short-term price spike, it appears to us that oil prices are stumbling toward some kind of stability," it added.
