* Analysts say $70-$80 range realistic for now
* Market holidays in Britain and U.S.
* For a technical view, click: []
(Updates prices, paragraphs 4-5)
By Barbara Lewis
LONDON, May 31 (Reuters) - Oil rose above $74 on Monday in
line with a timid recovery across financial markets, but was set
for its biggest monthly loss in 18 months after European
economic crisis raised the prospect of reduced fuel demand.
Although still under pressure following Fitch's downgrade of
Spain's credit rating on Friday [], the euro <EUR=>
rose modestly against the dollar on Monday and Asian and
European markets edged higher [].
Trade volumes were reduced as the U.S. and UK financial
markets are closed on Monday for public holidays.
U.S. crude <CLc1> for July delivery rose 53 cents to $74.50
a barrel by 1018 GMT, after settling down 58 cents on Friday.
London Brent crude <LCOc1> rose 59 cents to $74.61 a barrel.
Front-month U.S. crude, which hit a 19-month high of $87.15
at the start of May, has so far fallen by 14 percent since the
end of April in the steepest monthly drop since late 2008 when
the market was crashing from a record of $147.27 in July that
year.
Analysts say oil has moved into a range that could endure.
"It's been a bad month across asset classes," said Olivier
Jakob of Petromatrix.
"But the oil market is now pretty well balanced. For us
$70-$80 is something which is valid. We don't really see what
could justify prices over $85 and below $70, you would start to
see some consumer hedging."
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The $70-$80 range is also the level members of the
Organization of the Petroleum Exporting Countries have said they
favour as acceptable for consumers and producers, which has led
to a market assumption a sustained drop below $70 would lead to
improved OPEC discipline.
According to the latest Reuters survey, OPEC is only
delivering 51 percent of agreed output curbs. []
At the same time the group's surplus capacity, which it said
earlier this year stood at more than 6 million barrels per day,
is likely to prevent the market rising strongly in the medium
term especially as prospects for oil demand are very uncertain.
DRIVING AND HURRICANE SEASONS
The U.S. long holiday weekend marks the beginning of the
U.S. driving season, expected to boost gasoline demand.
At the same time, traders are monitoring forecasts for the
U.S. hurricane season after the National Oceanic and Atmospheric
Administration (NOAA) said the 2010 Atlantic storm season could
produce as many as 14 hurricanes. []
They could disrupt supplies in the U.S. Gulf of Mexico,
where BP's <BP.L> environmentally devastating oil spill
potentially has long-term implications for oil supply and has
led to a six-month suspension of exploratory drilling.
[]
In Europe, economic turmoil and a weakened euro, which has
made dollar-denominated commodities relatively expensive, is
expected to limit consumption.
Even the long-held conviction growth in Asia will sustain
oil demand could be under short-term strain.
Chinese Premier Wen Jiabao said on Monday global economic
growth was vulnerable to sovereign debt risks and raised the
possibility of a second economic downturn. []
The most recent data from the Commodity Futures Trading
Commission on Friday implied still bearish sentiment for oil
prices as money managers cut net crude oil long positions on the
New York Mercantile Exchange by 12,558 positions in the week to
May 25. []
(Additional reporting by Judy Hua in Singapore; Editing by
Keiron Henderson)
