Crude Oil Futures on Track for Weekly Gain on U.S. Economic Recovery
Crude Oil Futures on Track for Weekly Gain on U.S. Economic Recovery Reuters

Crude oil prices declined and hovered below $93 a barrel during the Asian trading hours on Monday as recent disappointing economic reports from both the U.S. and China weighed on the demand outlook.

Light sweet crude for June delivery declined 0.51 percent or 47 cents to $92.53 a barrel in electronic trading on the New York Mercantile Exchange during Asian trading hours. Brent crude oil futures for June delivery fell 0.49 percent or 51 cents to $102.65 a barrel on the ICE futures exchange in London.

Investor sentiment turned negative on Friday after official data showed that the U.S. economy grew less than expected in the first quarter, reinforcing concerns over the strength of economic recovery in the world’s largest oil consuming nation.

The U.S. Department of Commerce said Friday that the Gross Domestic Product (GDP) expanded at a 2.5 percent annual rate in the first quarter, up from 0.4 percent annual rate reported in the fourth quarter but fell short of economists' estimate of 3.0 percent gain.

"First-quarter GDP really disappointed, and as long as unemployment stays high, the U.S. Federal Reserve is going to have to keep its backstop on the economy with quantitative easing. Investors this quarter will be looking for a stronger PMI number, improved consumer confidence and improved consumer spending to feel confident about where the U.S. economy is headed," Ben Taylor, sales trader at the Sydney-based CMC Markets said.

Recent economic report from the China was also not encouraging and added to investors' worries that demand from world’s second biggest oil consumer may weaken. According to the data released Saturday by the National Bureau of Statistics of China (NBS), profits of industrial companies in the country rose 5.3 percent in March compared to that in the same month of the previous year, sharply lower compared to 17.2 percent rise in the first two months of this year.

A preliminary reading of the HSBC Flash Purchasing Managers’ Index (PMI) last week showed that Chinese manufacturing activity slowed in April compared to that in March. The HSBC Flash PMI, a measure of the nation-wide manufacturing, declined to 50.5 in April compared to 51.6 in March and also missed economists’ estimate of 51.5.

Reports from the world's third largest economy are not much enticing either as Japan is expected to post a modest increase in industrial production for March. A Reuters' forecast of the factory output data for March, which is likely to be released at 19:50 EST, estimates a 0.4 percent increase in industrial production in March, in comparison to 0.6 percent rise in February and 0.3 percent rise in January.

Meanwhile, traders also opted for caution ahead of a wave of economic data including the monthly U.S. nonfarm payrolls and central bank policy meetings in the euro zone and the U.S. The European Central Bank (ECB) is widely expected to cut interest rates at its policy meeting on May 2 given the downbeat economic news from the region.

On Friday, light sweet crude for the June delivery declined 64 cents and settled at $93.00 a barrel on the New York Mercantile Exchange while Brent crude for the June delivery fell 0.24 percent or 25 cents to settle at $103.16 a barrel.