U.S. crude oil ended higher for third straight session Monday, on supply concerns with focus on developments in Syria after Israeli airstrikes last weekend heightened tensions in the Middle East. Nonetheless, the gains were capped as investors weighed the more than expected U.S. crude oil stockpiles reported last week.
Oil prices were also boosted by increased energy demand prospects after some better than expected jobs data out of the U.S. last week and the European Central Bank cutting interest rates to a record low.
Tensions in the Middle East rose after Israeli missiles targeted Syrian military installations just outside Damascus, purported to have been carrying high-end surface-to-surface missiles from Iran for Hezbollah. Israel, however, has not claimed responsibilities for the attacks last week end.
Light Sweet Crude Oil futures for June delivery, the most actively traded contract, moved up $0.55 or 0.6 percent to close at $96.16 a barrel on the New York Mercantile Exchange Monday.
Crude prices for June delivery scaled a high of $97.17 a barrel intraday and a low of $94.85.
Oil prices gained nearly 3 percent last week with demand concerns easing after some positive jobs data from the U.S. raised economic recovery hopes. Prices were also helped by the European Central Bank's move to cut interest rates to a record low while not ruling out further easing measures if required.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 82.31 on Monday, up from 82.10 late Friday in North American trade. The dollar scaled a high of 82.41 intraday and a low of 81.98.
The euro traded lower against the dollar at $1.3077 on Monday, as compared to $1.3119 late Friday in North America. The euro scaled a high of $1.3140 intraday and a low of $1.3054.
In economic news, Chinese service sector growth eased to its weakest in almost two years in April amid weaker new order flow and a decline in employment level, a survey by Markit Economics and HSBC revealed Monday. The business activity index for the service sector fell to 51.1 in April from 54.3 in March. Although a reading above 50 indicates expanding activity, it still was the weakest expansion since August 2011.
The composite output index, that measures the performance of both manufacturing and services, dropped to 51.1 from 53.5 in March. This suggests the rate of expansion in private sector activity was the weakest since last October.
Elsewhere, eurozone private sector continued to contract in April, but at a less steeper pace than estimated earlier, final results of a survey by Markit Economics showed. The composite output index, that measures performance of both manufacturing and services, rose to 46.9 from 46.5 in March. The flash reading was the same as that of March. Readings below 50 suggests contraction of the sector. The services business activity index rose to 47 in April from 46.4 in March. The preliminary report showed a reading of 46.6.
During the week, focus will be on the Federal Reserve's consumer credit report for March, the U.S. Commerce Department's wholesale trade report for March, and the Treasury Budget report for April. Also on focus will be the crude oil inventories data from the Association of Petroleum Institute due Tuesday and the Energy Information Administration data due Wednesday.
