Oil dips below $51 amid weak consumer spending

Oil prices dipped below $51 a barrel on Friday in Asia as investors clung to a month-long trading range amid uncertainty about when the global economy may emerge from a severe recession.

Benchmark crude for June delivery was down 34 cents to $50.78 a barrel by midday in Singapore, in electronic trading on the New York Mercantile Exchange. The contract on Wednesday gained 15 cents to settle at $51.12.

Trading volume was light in Asia as markets in mainland China, Hong Kong, India, Malaysia, South Korea, Thailand and Singapore were closed for holidays.

Oil has traded near $50 a barrel for the past month as investor optimism about an eventual economic recovery offsets bleak news suggesting US consumer demand remains weak.

On Thursday, a Commerce Department report said consumer spending fell more than expected, dropping 0.2 per cent in March. And incomes were also down by 0.3 per cent as waves of layoffs made their way through the economy.

Meanwhile, the Labor Department said a record 6.3 million people drew unemployment benefits last week. However, the number of newly laid-off workers signing up for jobless benefits dropped unexpectedly to a seasonally adjusted 631,000.

Traders this month will be looking for signs from OPEC about a possible production cut. The Organisation of Petroleum Exporting Countries, which next meets on May 28, has announced output quota reductions of 4.2 million barrels a day since September. OPEC leaders have recently said the price of oil needs to be above $70 to fund high-cost production fields.

In other Nymex trading, gasoline for May delivery was steady at $1.47 a gallon and heating oil was steady at $1.31 a gallon. Natural gas for June delivery was steady at $3.37 per 1,000 cubic feet. In London, Brent prices fell 39 cents to $49.60 a barrel on the ICE Futures exchange.