- Oil is rising after three consecutive weekly declines
- Goldman Sachs says demand fears are ‘exaggerated’
- US inflation data and the OPEC report are under the microscope this week
SINGAPORE (Reuters) – Oil prices rose more than 2% on Monday as recession fears in the United States faded and some traders saw the three-week slump in crude on demand fears as overblown.
Brent crude was up $1.57, or 2.1 percent, at $76.87 a barrel by 11:19 a.m. EDT (1519 GMT). US West Texas Intermediate crude rose $1.73, or 2.4%, to $73.07.
An upbeat US jobs report for April helped oil rise around 4% on Friday even though labor market strength may force the Federal Reserve to keep interest rates higher for a while.
Brent ended last week down about 5.3% while US crude fell 7.1% even after Friday’s rebound. Both benchmarks have fallen for three consecutive weeks for the first time since November.
“Oil’s rebound (on Monday) follows the return of energy stocks on Wall Street last Friday after the US reported strong jobs data, easing fears about an impending recession,” said CMC Markets analyst Tina Ting.
Banking concerns have plagued the market recently after the collapse of three major regional banks. However, on Monday, regional banking stocks extended gains after rebounding on Friday.
“The market is less concerned about a banking crisis that could lead to a recession and hurt demand,” said Phil Flynn, an analyst at Price Futures Group.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, said the recent drop in oil looks excessive.
“The oversold condition in the market combined with Brent managing to find support ahead of the March decline forced recently established short sellers to seek cover, potentially highlighting that the recent sell-off has been overdone,” he said.
Goldman Sachs analysts said on Saturday that concerns about near-term demand and rising supplies are “overblown.”
A round of voluntary production cuts by some members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, called the OPEC+ community, begins this month and the group holds its next meeting on June 4.
Ahead, US April consumer price inflation figures will be in focus on Wednesday, which could influence the Fed’s stance on future interest rate decisions.
OPEC’s latest monthly oil market report is due out on Thursday, providing an updated reading of supply and demand forecasts.
(Reporting) By Sudarshan Varadhan. Editing by Sonali Paul
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