A woman fills her car with fuel at a BP petrol station in Dartford in southern England April 19, 2009. REUTERS/Luke MacGregor
Oil retreats towards $57 from 6-month highMay 11, 2009
By Jane Merriman
LONDON (Reuters) - Oil fell more than $1 a barrel toward $57 on Monday, pressured by weaker European equities and a firmer dollar.
U.S. crude was down $1.32 at $57.31 a barrel by 8:42 a.m. EDT. London Brent crude was down $1.36 at $56.78.
The oil price hit a six-month high of $58.75 on Friday after the U.S. economy shed fewer than expected jobs in April and government stress test results removed some uncertainty over the health of major American banks.
A mood among investors that the worst of the downturn might be over has helped boost global equity markets and oil has followed.
"It all depends on the stock markets," said Christopher Bellew, of Bache Commodities Ltd.
"We would need a substantial deterioration in equity markets for oil to go back into its old range. We seem to have broken into a new range of around $55-$59 a barrel," he said.
Oil, which has plummeted from a record high above $147 a barrel reached last year, has edged higher over the past three months alongside a rally in equity markets.
U.S. crude is up about 80 percent from a January low of $32.70 a barrel.
News from China, the world's second biggest energy consumer, offered support to the view that the economic climate is brightening.
A top Chinese central banker said the government's stimulus plan had worked better than expected, while crude imports data showed a spike in demand.
China's April crude oil imports saw the first monthly increase of the year and hit the second-highest record on a daily basis, providing more evidence that oil demand in the country was picking up.
In the United States, the world's biggest oil consumer, utilization at refineries was up last week by 2.6 percent to 83.3 percent.
"We believe this reflects refineries gearing up for the U.S. driving season," Deutsche Bank said in a research note.
New York RBOB gasoline futures struck a six month high last week.
But the bank believes the oil market's supply/demand fundamentals remain bearish.
"Eventually in our view, refiners will have to scale back and this will force crude oil back to $50 a barrel."
(Additional reporting by Alex Lawler in London and Fayen Wong in Perth; editing by Anthony Barker)