[SINGAPORE] Oil prices steadied on Monday as Japan's economy emerged from recession and as strong demand for refined products translated into healthy orders for crude.
Japan's economy rebounded from recession in the final quarter of last year, supporting oil prices, even though the data was weaker than expected.
Analysts said that healthy demand for refined products was also buoying crude markets. "Crude oil has shown strength on the back of higher product prices," Barclays said on Monday in a note. "Product markets have been supported by strong domestic demand, looming refinery turnarounds, and the potential impacts of the United Steelworkers union (USW) refinery strikes," it added.
Benchmark Brent crude futures were trading up three US cents at US$61.55 per barrel by 0620 GMT. US WTI crude was down five US cents at US$52.73 a barrel.
The steady prices follow strong gains made last week when oil markets rose after another drop in the US rig count, pushing Brent back above US$60 a barrel for the first time since December.
Despite the price rises of the past two weeks, analysts say significant oversupply remains in oil markets as output stays high while demand is relatively low. "We continue to believe that neither supply nor demand will respond materially near-term. On our estimates, global supply is running 1.4 million barrels per day above global demand in H1 2015, up from 0.9 in Q4 2014," Bank of America Merrill Lynch said late on Friday in a statement.
"Thus inventory dynamics could continue to deteriorate in coming weeks, leading to downside pressure on near-dated contracts. We reiterate our view that Brent will trade below US$40 per barrel over the next two months," it said.