Brent crude oil prices slipped but held above $119 per barrel on Monday as the prospect of a third round of liquidity stimulus by the United States continued to support commodities despite slower economic growth around the globe.
Brent June crude futures were down 35 cents to $119.48 a barrel by 1352 GMT, on track to close down for the second consecutive month. U.S. crude was down 80 cents at $104.13 a barrel.
Analysts and traders said the market was effectively trading sideways following data on Friday that showed slower-than-expected U.S. GDP growth in the first quarter, raising expectations of a fresh liquidity injection.
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.
James Zhang, energy analyst at Standard Bank, said the market was in a cautious mood ahead of a heavy week for U.S. data releases.
"The market is undecided, but if anything there is a slightly bearish bias given that the weekly U.S. jobless report has disappointed over the last few weeks. That potentially points to a downbeat non-farm payroll report on Friday," he said.
But he added that whenever U.S. 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," he suggested.
In Europe, Spain's economy slipped into recession in the first quarter as domestic demand shrank against a background of deep government spending cuts.
Although GDP declined 0.3 percent quarter-on-quarter and 0.4 percent 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," said Filip Petersson, commodity strategist at SEB.
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.
"It's still in the same range as Friday and because of the European holiday tomorrow, a lot of people are out today as well, which is making the market very quiet," said Christopher Bellew, a trader at Jefferies Bache in London. "It's very much sideways at the moment."
Analysts expressed surprise at how well oil was holding up given the bearish newsflow of the past few weeks.