(Updates prices, changes quote, Asian stocks moves)
* Oil falls towards $54 as investors book profits
* Signs of economic recovery grow
* Fundamentals bearish, with rises in U.S. stocks expected
By Maryelle Demongeot
SINGAPORE, May 5 (Reuters) - Oil edged down towards $54 a
barrel on Tuesday as investors paused for breath after a
four-day rally, when hopes of economic recovery sent the
contract to its highest settlement for 2009 in the previous
session.
A series of positive economic indicators from the U.S. and
India, together with a bullish survey of Chinese manufacturing
lifted oil to $54.64 in post-settlement trading, two cents shy
of its highest trade so far this year.
By 0550 GMT, U.S. light crude for June delivery <CLc1> fell
45 cents to $54.02 a barrel, having settled at $54.47 on
Monday, up $1.27, and its highest settlement since November 24.
London Brent crude <LCOc1> was down 27 cents at $54.31.
"It is optimism that we have "hit bottom" and the resulting
financial flows into the commodity sector that continue to buoy
the market," said Jonathan Kornafel, Asia director of
U.S.-based Hudson Capital Energy in his daily note.
"However, look for profit-taking on the recent run-up as
June WTI is now trading around resistance at $54.50 as well as
the top of the long-term $44-55 range," he added.
Oil has been trading between $44 and $55 a barrel for the
past two months, rebounding from five-year lows just above $30
hit this winter, but failing to push higher so far. But oil is
still trading around 63 percent below the record high above
$147 it hit in July 2008.
Hints that the U.S. economy may have bottomed out came on
Monday as U.S. construction spending rose 0.3 percent in March
in the first increase since September, according to Commerce
Department data, while pending U.S. existing home sales rose
unexpectedly in March, a private survey showed. []
China and India, Asia's two giant economies, also showed
signs of recovery, with a Chinese manufacturing index based on
a poll of industry executives conducted for Hong Kong-based
brokerage CLSA rising to a nine-month high of 50.1 in April
from 44.8 in March. []
India's factory activity expanded in April for the first
time in five months, according to the ABN AMRO Bank purchasing
managers' index <INPMI=ECI>. []
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> edged up to a fresh seven-month high, up as
much as 0.6 percent on the day. []
But the oil price upside could be capped, if forecasts of
rises in U.S. crude and products weekly stocks are proved
correct.
A Reuters poll of seven analysts showed on Monday U.S.
crude stocks probably rising for the ninth consecutive week
last week, which would leave them at another near 19-year high,
as imports were expected to maintain their strong pace and
refinery activity was little changed. []
The poll also showed an average forecast for a 1.0 million
barrel increase in distillate stocks and a 700,000 barrel build
in gasoline stocks.
"Oil price momentum suggests higher levels - fundamentals
suggest lower levels. The market takes firmer equity markets as
a lead indicator for stronger oil demand - not a bad assumption
- but the equity gains need to be consolidated," said Mark
Pervan, head of commodity research for ANZ Bank in his weekly
commodity update.
Oils correlation to equity markets is high, at 0.87 on a
20-day rolling basis, Pervan added.
Adding further support oil prices the U.S. dollar has lost
ground broadly against major currencies, and sent investors
back to commodities, helping the rise in oil prices. []
(Editing by Sambit Mohanty)
