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Oil prices rallied on Monday, extending their biggest weekly gain since early April, supported by improving risk sentiment in broader markets and ongoing short-covering.
According to Bloomberg, West Texas Intermediate (WTI) crude futures settled above $80 a barrel for the first time in a month, accelerating gains after prices breached their 200-day moving average. Brent crude, the global benchmark, also rose, finding support from rising equity markets amid scarce supply and demand signals.
“The crude oil picture has improved from scorched earth to apathy, leaving prices poised for upside based on macro inputs rather than structural improvements,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group
Stronger-than-expected U.S. nonfarm payroll data and indications that inflation is cooling, despite the Federal Reserve keeping interest rates steady and planning just one rate cut in 2024, also supported prices.
Oil futures rose 3.9% last week, the first weekly gain in nearly a month. The rally was partly driven by a significant wave of short-covering, with outright bearish bets on global benchmark Brent falling by the most since 2020.
