- Oil bounces back after three straight weekly declines
- Goldman Sachs says demand fears are ‘overdone’
- US inflation data and OPEC report in focus this week
SINGAPORE, May 8 (Portal) – Oil rose nearly 3% on Monday as recession fears eased in the US and some traders felt crude oil’s recent fall in prices was exaggerated with three straight weekly declines for the first time since November was.
A healthy US jobs report for April helped oil rise about 4% on Friday, although strength in the job market could force the Federal Reserve to keep interest rates high for longer.
Brent crude was up $1.83, or 2.4%, to $77.13 a barrel by 1200 GMT. US West Texas Intermediate (WTI) crude was up $2.06, or 2.9%, at $73.40.
“Oil’s rebound follows energy stocks’ comeback on Wall Street last Friday after the US reported strong jobs data that allayed concerns about an impending economic recession,” said Tina Teng, analyst at CMC Markets.
Brent ended last week down about 5.3%, while US crude tumbled 7.1% even after Friday’s rebound. Both benchmarks were down three straight weeks for the first time since November.
Ole Hansen, head of commodity strategy at Saxo Bank, said the recent drop in oil prices seems overdone.
“Oversold market conditions, coupled with Brent’s ability to find support ahead of the March low, forced recently established short sellers to seek cover, potentially underscoring that the recent sell-off was overdone,” he said.
Analysts at Goldman Sachs said Saturday that concerns about near-term demand and increased supply were “overstated.”
A round of voluntary production cuts by some Organization of the Petroleum Exporting Countries (OPEC) members and allies, collectively referred to as OPEC+, begins this month, and the group holds its next meeting on June 4.
Prior to that, Wednesday’s focus will be on US CPI inflation numbers for April, which may influence the Fed’s stance on future interest rate decisions.
OPEC’s latest monthly oil market report is due Thursday and provides an updated reading of the demand and supply outlook.
Reporting by Sudarshan Varadhan; Editing by Sonali Paul
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