Oil futures settled higher Monday, with Brent crude above $100 a barrel for the first time in a week, as buyers swooped in following last week's deep selloff.
Light, sweet crude for May delivery, which expired at the close of trading, settled 75 cents, or 0.9%, higher at $88.76 a barrel on the New York Mercantile Exchange. The more active June contract settled 92 cents, or 1%, higher at $89.19 a barrel.
Brent crude on the ICE futures exchange settled 74 cents, or 0.7%, higher at $100.39 a barrel. It was the first time the contract settled above the $100 mark since April 15.
Futures advanced as traders sought to cover short positions or pick up contracts at a discount following last week's selloff that was driven largely by concerns about weakening global oil demand.
"We saw crude oil come under a lot of pressure over the last couple of weeks and I think you saw some bargain hunters come in," said Andy Lipow, president of Lipow Oil Associates, a consultancy.
Signs of weak global oil demand have been a drag on oil prices, following demand-growth downgrades from Organization of the Petroleum Exporting Countries, the International Energy Agency and the Energy Information Administration. A number of Wall Street analysts have also cut their outlook on oil prices, citing demand weakness.
Nymex crude futures have sunk 9.4% from a recent peak reached in late January.
Despite ending the day higher, crude futures shed some of their steepest gains of the day. But oil prices will likely need additional cues before falling much further, some analysts said. Mr. Lipow pointed out overall oil demand continues to increase and stimulus measures around the world will place a floor under prices.
"Energy has a bit more of a positive tilt to it" compared with other assets Monday, said Bob Yawger, analyst at Mizuho in New York, pointing to the tepid day in equities. A drop in the U.S. stock market at one point sent oil futures into negative territory on the day, though prices recovered later.
The Dow Jones Industrial Average was recently up 0.2% at 14575.
Analysts have said any output reduction by OPEC could send prices rallying again. Monday, however, the oil minister of the United Arab Emirates suggested the oil market is balanced at current levels, and analysts say the UAE's view is normally aligned with that of Saudi Arabia, the cartel's biggest producer.
Front-month May reformulated gasoline blendstock, or RBOB, settled 0.3 cent, or 0.1%, lower at $2.7694 a gallon. May heating oil settled 2.18 cents, or 0.8%, higher at $2.8094 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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