Crude oil prices climbed higher on Monday as concerns about a possible recession in the United States eased. This decline, marking the first time since November that crude had registered three straight weeks of drops, was attributed to concerns over near-term demand and elevated supplies.
However, Reuters reported that April’s healthy US jobs report helped oil prices rebound by around 4 percent on Friday, despite the possibility that strong labour market conditions could prompt the Federal Reserve to maintain higher interest rates for an extended period.
As of 10:00 GMT on Monday, Brent crude had risen by 1.9 percent, or $1.41, to $76.71 per barrel, while U.S. West Texas Intermediate (WTI) crude had increased by 2.1 percent, or $1.50, to $72.84.
According to analysts, the rise in oil prices on Monday was in response to the recovery of energy stocks on Wall Street last Friday following the release of robust U.S. job data. This news also allayed concerns about an imminent economic downturn.
Despite this recovery, Brent crude had experienced a decline of approximately 5.3 percent last week, while U.S. crude fell by 7.1 percent, even after Friday’s rebound. Ole Hansen, the head of commodity strategy at Saxo Bank, to a news agency that the oil price drop appeared excessive. He said that the recent sell-off in oil prices was potentially overdone due to an oversold market condition, combined with Brent crude finding support ahead of the March low. As a result, short sellers were forced to seek cover.
Additionally, Goldman Sachs analysts said that concerns over near-term demand and elevated supplies were exaggerated. To address the situation, some members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, also known as OPEC+, will implement voluntary output cuts starting this month.
Reuters reported that OPEC+ is scheduled to hold its next meeting on June 4. Before this meeting, April’s U.S. consumer price inflation figures, which will release on Wednesday, could impact the Federal Reserve’s stance on future interest rate decisions. Furthermore, OPEC’s latest monthly oil market report, due on Thursday, is expected to provide an updated reading on the demand and supply outlook.
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