* U.S. weekly jobless claims at over 5-year low
* Doubts on China recovery pace weighing on sentiment
* Coming Up: Federal Reserve’s Bernanke speaks at 1330 GMT
By Luke Pachymuthu
SINGAPORE, May 10 (Reuters) – Brent oil edged down on Friday, trading in a tight range above $104 a barrel as stronger signs of U.S. recovery against persistent doubts over the Chinese economy sent mixed signals about demand from the world’s top two consumers.
The number of Americans filing new claims for jobless aid fell last week to its lowest in more than 5 years, indicating a resilience flagged earlier by a strong April employment report.
But a faster rise in Chinese inflation in April which limits the ability of the central bank to support tepid economic growth kept investor optimism in check.
“What you need to understand about what is going on in the U.S. is that we’re growing, this recovery is real. There may be some bumps but the fundamental push forward is there,” said Carl Larry, president of the Houston-based Oil Outlook and Opinions.
“Can we do better? Of course we can, I’d like to see that unemployment number come down under 6 percent. Once we get to that level, we’re going to see an acceleration of demand.”
Brent was down 20 cents at $104.27 a barrel at 0240 GMT. U.S. crude eased 18 cents to $96.21 a barrel. Brent was mostly unchanged for the week, while the U.S. benchmark was set to gain for a third week in a row.
A firmer dollar also weighed on oil prices, but the bigger concern among investors is the health of the world’s No. 2 economy, China. While consumer inflation rose in April, China’s factory prices fell for a 14th straight month.
In the first quarter, China’s gross domestic product grew by a less than forecast 7.7 percent, frustrating investors hoping for a strong rebound of at least 8 percent.
“If we see this level of economic activity through the end of the year, I’d expect that we won’t see much change in China’s consumption levels,” Larry said.
“And for the market, that basically reads as a pressure point for oil, in Europe it’s pretty much the same as we don’t see any change in their situation so demand is likely to remain status quo.”
But oil prices may draw some support from tensions in the Middle East that were heightened after Hezbollah leader Hassan Nasrallah said that Syria would respond to Israeli raids around Damascus by giving his group more sophisticated new weapons.
“Geopolitics continues to keep Brent supported over $100 … as long as you have Syria still in conflict and tensions between Iran and the West over its nuclear program, oil will have a floor,” Larry said.
The United States has blacklisted two companies it says helped Iran evade sanctions on oil sales and slapped penalties on four Tehran-based firms it says helped the Islamic Republic enrich uranium, the latest efforts to pressure Iran’s nuclear program. (Editing by Himani Sarkar)
Source: Reuters
