Oil prices rose slightly on Monday as traders remained cautious despite receding fears of a recession in the U.S., which drove prices down for three straight weeks for the first time since November.
U.S. West Texas Intermediate (WTI) crude futures were up $2.08, also 2.90%, at $73.40.
“Oil’s rebound follows energy stocks’ comeback on Wall Street last Friday after the U.S. reported strong job data, which eased concerns about an imminent economic recession that led to the selloff early in the week,” said Tina Teng, an analyst at CMC Markets.
Fears that the U.S. banking crisis will slow the economy and sap fuel demand in the world’s biggest oil consuming nation drove the Brent benchmark down 5.3% last week, while WTI plunged 7.1%.
However a healthy U.S. jobs report for April, a weaker dollar, and expectations of supply cuts at the next meeting of the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, in June, helped the benchmarks rebound about 4% each on Friday.
“Crude prices are trying to stabilize as energy traders wait to see if OPEC+ might have to signal they are willing to reduce output even further,” said Edward Moya, an analyst at OANDA.
Goldman Sachs analysts said in a note on Saturday that concerns over near-term demand due to stress in the U.S. banking system and an industrial slowdown, and elevated global supply due to limited compliance with OPEC+ cuts were “overblown”.
The investment bank maintained its Brent price forecast of $95 per barrel by December and $100 by April. ANZ Research analysts said they believed that the market focus would now shift away from economic concerns to tightening oil supply.
The United States is expected to report consumer price inflation figures for April on Wednesday, which could provide further clues on interest rate moves amid broad expectations that the U.S. Federal Reserve will pause rate hikes.
Traders this week will also keenly watch Chinese economic indicators including trade, inflation, lending and money supply figures for April, as market participants continue to gauge economic recovery in the world’s second largest oil consumer.
“Crude prices may continue to take the rebounding tailwind,” CMC Markets’ Teng said.