Brent crude oil prices traded around $50 a barrel on Monday, with some support coming from falling US output growth but an expectation of weak Chinese economic data weighing on markets.
Analysts said prices were receiving some support around current levels but added that there was not much room for larger price gains.
"Some positive data points helped to stabilize oil for now...Upbeat IEA comments and a falling US rig count were the latest positive news. While the news was able to halt oil's price decline, it was not enough to turn prices bullish," Morgan Stanley said on Monday in a note.
China is due to report gross domestic product figures on Tuesday, which are expected to show China’s full-year growth would undershoot Beijing’s 7.5-per cent target and would be the weakest in 24 years.
In Europe, the main event of the week will be Thursday's meeting of the European Central Bank (ECB), which is considered almost certain to see the launch of a government bond-buying campaign, pointing to further euro falls against the dollar as well as to downward on oil prices.
“Commodity markets to be driven by currency markets and expectations of ECB quantitative easing this week,” ANZ bank said in a note on Monday.
Brent crude futures were trading at $50.12 per barrel at 06:50 GMT, down 5 cents since their last settlement, although prices dipped below $50 a barrel in earlier trading. US crude was trading down 17 cents at $48.52 a barrel.
Oil prices have dropped by more than half since last June as production around the world has soared while demand slows. Although the International Energy Agency (IEA) said that a reversal in trend was possible this year, it added that prices may fall further before the market begins to rise again.
Analysts said that prices would likely rise away from levels below $50 per barrel, but many noted that the longer-term outlook was for oil prices to remain at lower levels than in recent years.
“We do not subscribe to the theory of US$20/bbl (barrel) oil. The price may go down to the US$30/bbl level for a short while, but it will bounce back,” research firm Facts Global Energy (FGE) said in its January note to clients.
Reuters
