30 April 2013, News Wires – Brent crude steadied under $104 a barrel on Tuesday, holding on to most of Monday’s gains as investors remained cautiously optimistic that further global stimulus measures would boost oil demand.
Brent crude steadied under $104 a barrel on Tuesday, holding on to most of Monday’s gains as investors remained cautiously optimistic that further global stimulus measures would boost oil demand.
Brent dropped $0.06 to $103.75 a barrel by 1115 GMT, after earlier touching a low of $103.41. US crude was $0.08 lower at $94.42 a barrel, on track to end the month down nearly 3%.
Oil has fallen 5.9% in April, heading for its biggest fall since last May as weak economic data darkened the demand outlook.
Underlining the difficulties facing the European economy, eurozone unemployment for June rose to 12.1% for March, while German retail sales fell for the second month running in March, confounding forecasts of a rise.
Spain’s economy shrank for the seventh straight quarter from January to March, preliminary data showed on Tuesday, and the recession looks set to last into next year.
“In the last couple of weeks economic data all over the world has capped the upside, and until data shows a strong rebound, there’s little chance for a bounce back,” said Andy Sommer, analyst at EGL in Dietikon, Switzerland.
However fears that economic recovery could be running out of steam have prompted growing confidence that the European Central Bank and Federal Reserve could extend monetary measures to stimulate economic growth.
“The market believes there will be some more quantitative easing, and that should be supportive,” said Bjarne Schieldrop at SEB in Oslo.
The US Federal Reserve kicks off a two-day meeting later in the day and traders are waiting to see if a sluggish economic recovery and a slowdown in inflation could not only end talk of tapering bond buying but actually push the central bank into buying more.
The Fed is currently buying $85 billion of debt a month and the talk had been of when it might start to scale back. However, a recent string of soft data has changed the conversation.
Inflation in the eurozone has fallen to a three-year low and unemployment is at a new record, data showed on Tuesday, raising expectations of an interest rate cut by the ECB to reignite the stagnant economy.
Traders will also closely watch this week’s data from China, the world’s second biggest consumer, that may show factory activity in April expanded at its fastest pace in 12 months.
The earlier private sector survey of purchasing managers, sponsored by HSBC, showed activity in China’s industrial sector dipped in April as new export orders shrank.
“With China, we know growth has slowed, but I keep saying that a 7% to 8% growth looks so much better than a recession,” Carl Larry, president of the Houston-based Oil Outlook and Options said.