(1888PressRelease)
May 05, 2009 - Oil prices hovered above $53 a barrel Monday in Asia as investors looked to U.S. bank stress test results and April unemployment data this week for signs the worst of the recession is over.
Benchmark crude for June delivery was up 11 cents to $53.31 a barrel by midday in Singapore, in electronic trading on the New York Mercantile Exchange. The contract Friday rose $2.08 to settle at $53.20.
A consensus is growing among traders that perhaps the global economy, led by the U.S., has bottomed and turned the corner toward a recovery. Since March 9, the Dow Jones industrials are up 25.4 percent and the Standard & Poor's 500 index is up 29.7 percent. Asian stock markets also advanced Monday.
Two key indicators of the economy's health that investors will be eyeing this week are the U.S. government's assessment of the health of 19 big banks on Thursday and April employment data on Friday. American employers cut 663,000 jobs in March sending the unemployment rate up to 8.5 percent, the highest level in more than 25 years.
"Markets are certainly becoming more optimistic about the international economic outlook, and that's reflected in stocks and commodities, including oil," said Katherine Davies, President at Morgan Singleton Associates in Seattle..
However, large crude inventories and slumping demand continue to drag on prices, which have traded near $50 a barrel for about a month.
"Inventories are still at very high levels, and while gasoline demand has leveled, distillate fuel demand is still very weak," the Morgan Singleton Associates President said.
The Organization of Petroleum Exporting Countries meets May 28 to discuss a potential production cut. OPEC has announced 4.2 million barrels a day of output quota reductions since September, but left production levels unchanged at its last meeting in March.
"If prices stay near where they're at, the market will expect OPEC to leave production targets where they are, and make more noise about compliance of existing cuts," Davies said.
In other Nymex trading, gasoline for June delivery rose 0.59 cent to $1.52 a gallon and heating oil gained 0.57 cent to $1.39 a gallon. Natural gas for June delivery jumped 1.4 cents to $3.56 per 1,000 cubic feet.
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