Oil futures rose above $100 a barrel on Monday, extending the two previous sessions’ gains as prices drew buyers back into the market following sharp drops earlier in the month.
Reuters report showed that June Brent crude was up 72 cents to $100.37 a barrel by 1320 GMT. U.S. crude for June delivery was up 50 cents to $88.77 a barrel after hitting a high of $89.45.
Brent has lost nearly 8.5 percent since the start of April on concerns about demand as growth slowed in the United States and China, the world’s two largest oil consumers, while recession in Europe deepened.
“There is a little bit more confidence in the market. We’re seeing a rebound after poor news as people begin to think the economic outlook is not as bad as they feared,” said Simon Wardell, an analyst at Global Insight.
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“This is more bargain-hunting than anything else. People are getting back in the market, but that may not be sustained depending on the (economic) data” this week, he added.
Gold, which has also taken a tumble in recent weeks, was up more than 2 percent on Monday, supported by strong physical buying.
Investors will scour U.S. and Chinese data this week for growth cues. The HSBC Purchasing Managers’ Index for China for April will be released on Tuesday, while the United States will announce first-quarter GDP growth on Friday. Economists polled by Reuters expect the U.S. economy to have expanded by 3.0 percent, up from 0.4 percent in the last three months of 2012. A pair of unexpectedly soft regional Federal Reserve economic surveys last week, however, reinforced the view that the fourth spring slowdown in as many years is unfolding in the United States.
“Are we in the midst of a fundamental reappraisal of oil’s price potential or merely witnessing a temporary loss of confidence? There is a real chance on this occasion that it is the former,” David Hufton of PVM oil brokerage said, citing a tepid global growth forecast, reduced political concerns and high stocks.
