U.S. crude rose above $70 a barrel on Monday, recouping some of last week’s losses, but analysts said sentiment remained fragile and prices could again be hit by macroeconomic pessimism.
The euro fell broadly on Monday, pulling back from gains last week, after the Spanish central bank’s takeover of a savings bank added to jitters about debt problems in some of the weaker euro zone economies.
U.S. crude rose 23 cents to $70.27 a barrel by 1342 GMT. Brent crude was down 20 cents at $71.48.
Oil in New York has fallen steeply from a 2010 high of $87.15 reached in early May. It touched a low of $64.24 on May 20 — the weakest for a nearby contract since July 2009.
“We’ve made a long correction already, and one should expect to see a little bit of congestion around current levels while we wait to see what direction the global markets take,” said Olivier Jakob, oil analyst at Petromatrix.
The euro was on the back foot after the Bank of Spain said on Saturday it had taken control of CajaSur following the failure of its planned merger with another regional lender.
The move highlighted the weakness of the banking sectors of some euro zone members, which are already suffering from fiscal problems and struggling to bring down their budget deficits.
Oil markets remain well supplied with the Organization of the Petroleum Exporting Countries pumping about 2 million barrels per day (bpd) above agreed output targets.
“The fundamentals of oil haven’t suddenly changed. There’s still plenty of oil about,” said Rob Montefusco, a commodity broker at Sucden Financial.
Crude stocks at the delivery hub for U.S. futures contracts in Cushing, Oklahoma are at a record high.
While oil is just below the $70-$80 range many in OPEC have said they prefer, OPEC officials have stopped short of calling for any steps to prop up prices and the group is not scheduled to meet until October.
Some in the oil market expect prices to recover given the demand coming from emerging economies.
World oil demand is expected to rise by 1.62 million barrels per day (bpd) in 2010, led by emerging economies such as China, according to the International Energy Agency. Global consumption declined in 2009.
“I think the weakness last week was a bit overdone when you look at the incredibly strong demand data from China,” said Christopher Bellew, a broker at Bache Commodities. “It probably won’t stay down here too long.”
By Alex Lawler
Tags: consumers, debt crisis, economy, euro zone, financial, global market, stock market, us economy, wall street
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