Michael Galvis: Oil Back Above $40 a Barrel

LONDON, Feb 23 (Reuters) — Oil rose above $40 a barrel on Monday, recovering from earlier losses, after sentiment was lifted by a report the U.S. government was in talks on increasing its stake in Citigroup.

Further evidence the Organization of the Petroleum Exporting Countries has enforced output cuts also provided support, although persistent worries about the weakness of the global economy limited gains.

U.S. front-month crude rose 29 cents to $40.32 by 6 a.m. ET, off a session low of $39.53. The contract ended 15 cents lower at $40.03 on Friday.

“For the moment, the crude market seems to be holding up within the $32-$50 trading range we suspect will be with us for some time to come,” MF Global said in its daily note.

“The upside remains sticky above $50 given the dreary macro situation, while the downside will be kept in check by OPEC’s ongoing efforts to cut production.”

European and Asian stocks rose and the dollar slipped on Monday after the Wall Street Journal reported the U.S. government could end up owning as much as 40 percent of Citigroup Inc.

A source familiar with the situation told Reuters talks were ongoing between Citi and regulators that could increase the government’s stake.

The Citigroup news cheered investors who cut their safety trades, prompting gold, a safe-haven investment, to fall after topping $1,000 an ounce last week.

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