Oil steady above $119 on stimulus hopes
By Claire Milhench
LONDON (Reuters) - Oil prices held steady above $119 per barrel on Monday as the prospect of a third round of liquidity stimulus by the United States and a weaker dollar continued to support commodities despite slower economic growth around the globe.
Brent June crude futures were down 48 cents to $119.35 a barrel by 5:01 a.m. EDT (0921) GMT, on track to close down for the second consecutive month. U.S. crude was down 35 cents at $104.58 a barrel.
Analysts said the market was effectively trading sideways following data on Friday which showed slower-than-expected U.S. GDP growth in the first quarter, raising hopes of a fresh liquidity injection.
"There are two factors at play that are preventing another sharp drop at the moment - the weaker U.S. dollar and the expectation that the Fed will come up another round of quantitative easing," said Carsten Fritsch, an energy analyst at Commerzbank in Frankfurt. "That is supporting commodity prices."
The dollar hit a two-month low against a basket of currencies .DXY on Monday. A weaker dollar makes commodities priced in dollars more affordable for buyers using other currencies.
The dollar is likely to come under more pressure if this week's data, including the key U.S. jobs numbers, disappoints.
"If growth in the U.S. is going to be weaker than the Fed and the market expect, then the Fed will have to act," said Jeremy Friesen, a commodities strategist at Societe Generale.
In Europe, data showed that Spain's economy had slipped into recession in the first quarter as domestic demand shrank against a background of deep government spending cuts. Continued...