Oil edged down towards $54 a barrel on Tuesday as investors paused for breath after a four-day rally, when hopes of economic recovery sent the contract to its highest settlement for 2009 in the previous session. A series of positive economic indicators from the US and India, together with a bullish survey of Chinese manufacturing lifted oil to $54.64 in post-settlement trading, two cents shy of its highest trade so far this year.
By 0550 GMT, US light crude for June delivery fell 45 cents to $54.02 a barrel, having settled at $54.47 on Monday, up $1.27, and its highest settlement since November 24. London Brent crude was down 27 cents at $54.31. "It is optimism that we have "hit bottom" and the resulting financial flows into the commodity sector that continue to buoy the market," said Jonathan Kornafel, Asia director of US-based Hudson Capital Energy in his daily note.
"However, look for profit-taking on the recent run-up as June WTI is now trading around resistance at $54.50 as well as the top of the long-term $44-55 range," he added. Oil has been trading between $44 and $55 a barrel for the past two months, rebounding from five-year lows just above $30 hit this winter, but failing to push higher so far. But oil is still trading around 63 percent below the record high above $147 it hit in July 2008.
Hints that the US economy may have bottomed out came on Monday as US construction spending rose 0.3 percent in March in the first increase since September, according to Commerce Department data, while pending US existing home sales rose unexpectedly in March, a private survey showed.
China and India, Asia's two giant economies, also showed signs of recovery, with a Chinese manufacturing index based on a poll of industry executives conducted for Hong Kong-based brokerage CLSA rising to a nine-month high of 50.1 in April from 44.8 in March.
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