Oil futures moved higher Monday as upbeat sentiment about economic prospects in Asia and Europe outweighed concerns a higher U.S. rig count stoked worries about global oversupply, although a stronger dollar pressured prices.
Oil futures moved higher Monday as upbeat sentiment about economic prospects in Asia and Europe outweighed concerns a higher U.S. rig count stoked worries about global oversupply, although a stronger dollar pressured prices. International benchmark Brent futures rose 3 cents, or 0.1 percent, to $53.56 a barrel by 0658 GMT. The March contract closed the previous session down 13 cents at $52.83 a barrel.
U.S. West Texas Intermediate crude futures climbed 10 cents, or 0.2 percent, to $50.70 a barrel after settling 25 cents higher in the previous session. Both contracts spent most of the Asia time zone in negative territory but reversed direction as trading in Europe opened.
That came as manufacturing data showed factories across much of Asia posted another month of solid growth in March, rounding off a strong quarter for the world’s manufacturers.
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Brent and U.S. crude posted their worst quarterly loss since late 2015 in the March quarter. U.S. futures fell nearly 6 percent from the previous quarter, while Brent lost 7 percent as rising inventory levels outpaced output cuts by OPEC and non-OPEC members.
Crude prices staged a three-day rally last week amid expectations members of the Organization of the Petroleum Exporting Countries (OPEC) and non-members such as Russia would extend production cuts beyond June. But prices fell on Friday after energy services firm Baker Hughes said the U.S. rig count increased by 10 to 662 last week, making the first quarter the strongest for oil rig additions since mid-2011.
“We could be getting close to the end of the rally. Today’s pause may be significant in terms of market direction – we’ll see what happens in Europe and the U.S. later today,” said Ric Spooner, chief market analyst at Sydney’s CMC Markets. “We’ve had a pretty significant rally in the past week, driven by Libya’s production not doing as well due to disruptions, good utilisation rates by U.S. refiners and talk of OPEC and non-OPEC members extending production cuts for another six months,” Spooner said.
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“Now the market may have priced all those factors in and investors are waiting for additional indicators to give oil prices direction.” That could come later on Monday when Europe and the U.S. release purchasing managers’ index (PMI) data. PMI data from China on Saturday showed the country’s factories expanded for a ninth straight month in March but at a softer pace as new export orders slowed.
“The China PMI figures were pretty positive – they provide background support for oil prices,” Spooner said. The U.S. dollar index rose against a basket of currencies on Monday. A strong dollar makes greenback-denominated commodities including oil more expensive for holders of other currencies.
(Reporting by Keith Wallis; Editing by Richard Pullin and Biju Dwarakanath)