LONDON -- Oil prices rose towards US$81 a barrel on Monday, recouping some of the previous session’s losses, supported by a weaker dollar and positive data, including a rise in Euro zone sentiment in March.
U.S crude for May delivery rose 69 cents to US$80.69 a barrel by 1101 GMT. The contract settled down 53 cents at US$80.00 per barrel on Friday, bringing weekly losses to 0.84%. London Brent crude gained 63 cents to US$79.92.
“Oil is moving on the dollar,” said Eugen Weinberg, oil analyst at Commerzbank in Frankfurt.
“Equity markets are also higher but the dollar is much weaker against the euro and that is dragging all commodities higher,” Mr. Weinberg added.
European stock markets followed Hong Kong’s index higher on Monday, raising optimism over the strength of the global economic recovery and an increase in demand for fuel.
The dollar index softened against the euro on Monday, increasing risk appetite and boosting commodity prices.
Data showing Euro zone economic sentiment rose more than expected in March and robust Asian economic indicators also helped to boost oil market sentiment.
ECONOMIC SENTIMENT
China’s annual economic growth will reach 12% this quarter, a government researcher said, as economists raised growth forecasts for the world’s second-largest energy user after strong industrial output growth last month.
Japanese retail sales jumped the most in 13 years in the year to February due to the lingering effects of government stimulus, while South Korea’s current account swung back to a surplus in February on brisk exports.
On Friday, all eyes will turn to key monthly U.S. non-farm payrolls data for the latest indication of the strength of economic recovery in the world’s largest energy consumer.
The consensus is for a gain of 190,000 jobs in March, the second month of jobs growth since the recession started in December 2007, and the largest increase since March of that year.
Having traded intra-day above US$80 for the past 27 trading sessions, some traders said oil prices appear to be ready for a breakout from current levels.
However, with crude oil demand fundamentals continuing to clash with the positive macroeconomic data, analysts said prices could struggle to break out of the US$84 mark -- the highest price struck this year.
Oil prices could stay in the US$70 to US$80 range over the next decade, according to a report by OPEC released ahead of a major oil conference this week which reiterated demand forecasts made last year.
Oil price volatility has dropped signficantly and prices have been holding to a tighter range.
