Oil rises as recession worries ease.

Oil Prices Rise as U.S. Recession Fears Ease

Oil prices rose on Monday as traders took the view that crude’s recent price slide was overdone. Brent crude was up 1.9% at $76.71 a barrel, while U.S. West Texas Intermediate crude gained 2.1% to $72.84. The 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.

Healthy U.S. Jobs Report Boosts Oil Prices

A healthy U.S. jobs report for April helped oil to climb by about 4% on Friday, even though labour market strength could compel the Federal Reserve to keep interest rates higher for longer. Goldman Sachs analysts on Saturday said that concerns over near-term demand and elevated supplies were “overblown”.

OPEC+ Output Cuts Begin This Month

A round of voluntary output cuts by some members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, begin this month and the group holds its next meeting on June 4. OPEC’s latest monthly oil market report is due on Thursday, providing an updated reading on the demand and supply outlook.

Upcoming Economic Data to Watch

Before the OPEC meeting, 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.

• Brent crude was up $1.41, or 1.9%, at $76.71 a barrel by 1000 GMT.
• U.S. West Texas Intermediate (WTI) crude gained .50, or 2.1%, to $72.84.
• Both benchmarks were down for three weeks in a row for the first time since November.

Oil’s recent drop looked excessive, according to Ole Hansen, head of commodity strategy at Saxo Bank. “An oversold market condition combined with Brent managing to find support ahead of the March low forced recently established short sellers to seek cover, potentially highlighting that the recent sell-off was overdone,” he said.