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The price of oil rose to near $96 a barrel on Friday ahead of the release of Conference Board's index of leading indicators for the U.S. economy.
By early afternoon in Europe, benchmark oil for June delivery was up 45 cents to $95.61 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 86 cents on Thursday.
The Conference Board's index attempts to gauge what's coming over the next several months â¿¿ investors will watch it for clues about the strength of the recovery in the world's largest economy.
Analysts, however, say the upward momentum in oil prices may be limited amid signs that the U.S. and European economies still face considerable challenges.
Applications for U.S. unemployment aid rose last week by 32,000 to a seasonally adjusted 360,000, the highest in six weeks, the Labor Department said this week. A report on housing was neutral, while manufacturing in the mid-Atlantic region fell.
That data came on top of confirmation that the 17-nation euro region remained in recession after contracting for a sixth-straight quarter in the January-March period.
"Several forces should keep the region in recession, including continued fiscal austerity, poor credit conditions in peripheral economies and weak external demand," analysts at Capital Economics said in a market commentary.
"The U.S. is the only major advanced economy to have achieved steady growth since 2009. The latest data have been mixed, but the fundamentals look strong enough to sustain a solid, if unspectacular, recovery."
Oil prices are likely to be limited also by a stronger dollar, which makes crude more expensive for traders using other currencies, and reports showing U.S. stockpiles of crude are near all-time highs.
"It is questionable whether the oil prices will be able to defy a stronger U.S. dollar for any length of time in view of the oversupplied market," said a report from analysts at Commerzbank in Frankfurt. "It is estimated that OPEC is producing approximately 1 million barrels of crude oil per day more than is needed at present."