Oil prices edged lower but hovered above US$61 a barrel yesterday in Asia as investors eyed an OPEC meeting this week and weighed evidence of a global economic recovery.
Trading was light because US markets were closed yesterday for Memorial Day.
Benchmark crude for July delivery was down US$0.35 to US$61.32 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose US$0.62 to settle at US$61.67.
Oil has rallied on investor optimism that the worst of the global economic downturn is over. Traders will get fresh data to mull this week when the US releases a consumer confidence index for this month and reports on sales of existing and new homes last month.
In Asia, there are signs that the drop in exports has bottomed, although the outlook remains murky.
Investors will also be looking for evidence of increased demand as the US summer driving season begins.
“The US$60 level implies that we’re going to have a V-shaped recovery in the global economy, and there’s really very little evidence of that,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
“In the near-term, the rhetoric about post-Memorial Day driving activity may provide support, but eventually fundamentals will re-exert themselves in the market,” he said.
The OPEC meets tomorrow in Vienna to discuss a possible production cut that would add to 4.2 million barrels a day of output reductions the cartel has announced since September.
OPEC leaders this year have said they want the price of crude at US$70 a barrel, and most analysts say the recent jump to above US$60 from below US$35 in March will keep the group from any further production cuts.
“We don’t expect any changes in output targets,” Shum said. “The price is too high to cut.”
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