Brent crude oil was steady above 125 dollars a barrel last week supported by fresh signs of a sustained recovery in top oil consumer, the United States.
Hopes for firmer oil demand rose after a key gauge of U.S. manufacturing activity beat expectations in March, a day after data showed a similarly strong performance by China’s factories.
The upbeat data offset disappointing economic numbers from Europe.
However, trading is likely to stay range bound ahead of the long Good Friday weekend and as the market watches for key jobs data from the United States due on Friday.
“The mood has changed a bit with the good PMI numbers from China and the U.S., although the risks in the euro zone remain,” said Victor Said, Informal Global Markets in Singapore analyst.
“The market took a breather and is likely to be subdued for the rest of the week.
“No one wants to be caught out during the long weekend, especially if there’s a surprise from the U.S. non-farm payrolls report.”
U.S. crude futures lost 35 cents to 104.88 dollars, after rising by more than two dollars in the previous session.
The threat of further supply disruptions also supported prices, as British oil major BP said it had shut the Valhall platform in the North Sea penultimate week. Traders said the shutdown led to loading delays of one of the four crude oil streams used for the global Brent price benchmark.
The Institute for Supply Management’s index of U.S. factory activity rose to 53.4 in March from February’s 52.4, topping economists’ expectations and keeping the reading above 50, indicating expansion in the sector.
Adding to the optimism, the Energy Information Administration (EIA) said U.S. oil demand in January was revised higher by 169,000 barrels per day (bpd) from the previous estimate.
But that still left demand down 853,000 bpd, or 4.46 percent, from a year earlier.
Ahead of weekly reports on U.S. oil inventories, crude stocks were expected to have risen last week, according to a media survey of analysts.
However, upbeat sentiment was dampened by ongoing concerns of slowing oil demand in major consumers Europe and Japan. There was also uncertainty surrounding Japan’s oil demand, after a top government spokesman said that a ministerial-level meeting last Tuesday would not yield a decision on the restart of two nuclear reactors.