SINGAPORE – Oil prices crept to near $57 a barrel Monday in Asia as traders mulled whether last week's push to above $60 was justified amid signs of weak crude demand.
Benchmark crude for June delivery was up 64 cents to $56.98 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. On Monday, the contract dropped $2.28 to settle at $56.34.
A series of lower forecasts for world oil consumption last week undercut investor optimism that a global economic recovery was imminent. The International Energy Agency, the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries all cut crude demand expectations.
The outlook for the U.S. economy also turned darker last week after dismal news on unemployment and housing were reported. Retail sales fell unexpectedly in April.
"The fundamentals of oil remain quite gloomy," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. "The retail sales results show the U.S. economy is still struggling."
Crude has risen from below $35 a barrel in March, boosting gasoline and other oil product prices just as the U.S. economy is fighting to emerge from a severe recession.
High oil prices over the last two years, which surged to a record $147 a barrel in July, helped undermine consumer demand and plunge the world into its worst economic slowdown since World War II.
"When oil goes to $60 while major economies are still struggling, those high prices will simply slow down an economic recovery," Shum said.
In other Nymex trading, gasoline for June delivery rose 1.24 cents to $1.69 a gallon and heating oil gained 1.48 cents to $1.43 a gallon. Natural gas for June delivery jumped 1.2 cents to $4.11 per 1,000 cubic feet.
In London, Brent prices rose 62 cents to $56.60 a barrel on the ICE Futures exchange.