By FXEmpire.com

WTI crude oil prices slipped but held above $104 per barrel on Monday as the prospect of additional monetary stimulus by the US continued counter-balance slower economic growth around the globe. US crude was down 80 cents at $104.13 a barrel.

Economist and speculators said the market was effectively trading sideways following data on Friday that showed slower-than-expected US GDP growth in the first quarter, raising expectations of a fresh liquidity injection. The markets had forecast growth at 2.5% and the estimate came in at 2.2%. This was just another set of lackluster eco reports over the prior two week period.

The Chicago purchasing management index for April came in at 56.2, missing a consensus forecast for 61, and lower than March’s 62.2.

The market is undecided, but if anything there is a slightly bearish bias given that the weekly US jobless report has disappointed over the last few weeks. That potentially points to a downbeat non-farm payroll report on Friday. Investors as well as politicians are beginning to question the strength of the US recovery and are reminded of the spring stall over the past three years.

Whenever US data show signs of weakness, the market sees a greater possibility of another round of monetary easing. So we are getting a tug-of-war between what is going on in the real economy and what the central banks might do with monetary policy. Prices will swing up and down within a fairly narrow range for a bit unless the data really surprises.

Crude is also facing one last enemy, and that is the Obama Administration and the Strategic Reserves, with crude at any price over 100.00 it will be difficult for Obama to win re-election. The price of crude oil effects consumer confidence, inflation, job creation and manufacturing.

In Europe, Spain’s economy slipped into recession in the first quarter as domestic demand shrank against a background of deep government spending cuts. The bookmarkers are now offering even money, on Spain needed a bailout.

Although GDP declined 0.3% quarter-on-quarter and 0.4% year-on-year, this was not as bad as analysts had forecast. The Spanish GDP number, which could have been depressing, came in a bit above expectations but not much. If you are a glass 1/2 full 1/2 empty type of guy.

Trading volumes are expected to be fairly light today because of the May Day bank holiday across much of Europe on Tuesday. This may limit oil price moves.

Markets are overall surprised at how well oil was holding up given the bearish sentiment of the past few weeks.

There is an armada of tankers heading towards Asia from the Middle East so there’s a general feeling of over-supply in the market. OPEC output in April hit its highest level since 2008 as extra crude from Iraq, Saudi Arabia and Libya more than compensated for the lowest Iranian supply in two decades ahead of an EU embargo.

Speculator positioning in US crude oil futures and options was mixed in the week to 24 April, CFTC data showed on Friday, with traders cutting their positions on the New York Mercantile Exchange but raising them in London.

Meanwhile, data from the Intercontinental Exchange showed that speculators turned bearish on the outlook for Brent, cutting back their net long positions as Brent futures prices dipped.

Investors will interpret data on Chinese PMI on Tuesday and US employment on Friday for a better read on the economic health of the world’s two largest oil consumers.

With geopolitical situations under control and the oversupply of oil and the reduced demand, prices should be falling. And they aren’t supporting President Obama’s allegations that speculators are pushing the prices upwards.

Click here a current Crude Oil Chart.

Originally posted here