After three consecutive weeks of decline, oil prices rose on Monday as some traders believed that the recent slide was overdone and U.S. recession fears eased.
Brent crude oil, against which Nigerian oil is priced, climbed by 1.9% to $76.71 a barrel while U.S. West Texas Intermediate (WTI) crude gained 2.1% to $72.84.
The rise was attributed to a healthy U.S. jobs report for April that helped the oil market climb about 4% on Friday, despite the possibility of the Federal Reserve keeping interest rates higher for longer.
According to CMC Markets analyst Tina Teng, “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.”
Despite a decline of about 5.3% in Brent and 7.1% in U.S. crude last week, Goldman Sachs analysts stated that concerns over near-term demand and elevated supplies were “overblown.”
Also, Ole Hansen, head of commodity strategy at Saxo Bank, believed that oil’s recent drop looked excessive due to an oversold market condition combined with Brent finding support ahead of the March low, forcing recently established short sellers to seek cover.
Looking ahead, a round of voluntary output cuts by some members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, is set to begin this month. The group holds its next meeting on June 4th.
Before then, U.S. consumer price inflation figures for April will be in focus on Wednesday, potentially influencing the Fed’s stance on future interest rate decisions. OPEC’s latest monthly oil market report is due on Thursday, providing an updated reading on the demand and supply outlook.
