- WTI futures bounce up from $37.55 and return to $39 area.
- Oil prices rise as bright data boosts hopes of economic recovery.
- Crude prices are expected to consolidate over the next weeks – OCBC.
Front-month WTI futures have opened the week on a strong footing, appreciating more than 2% to reach prices beyond $39. WTI oil has taken back all the ground lost on Friday, fuelled by more positive risk sentiment, as upbeat economic data has offset fears of a second coronavirus wave.
Oil prices rise despite higher COVID-19 cases
WTI prices have bounced up from session lows at $37.54 to advance about $1.5 on the European trading session and test the $39 level during the US trading. An improved market mood, following better than expected industrial profits figures in China, has eased concerns about the global growth in coronavirus cases and increased demand for the higher-yielding oil.
Beyond that, news reports about that China has approved a coronavirus vaccine for military use have contributed to improving sentiment. On the negative side, however, the bankruptcy of the US fracking giant, Chesapeake, crushed by the decline of oil and gas prices has weighed on the overall positive market mood.
Oil prices, expected to consolidate over the next weeks – OCBC
On a bigger picture, oil prices remain consolidating below $40 after the steady recovery seen in May and, according to the commodity strategists at the OCBC Bank, this trend is expected to extend into the coming weeks, “The market appears to be balancing itself, with the high prices encouraging a supply comeback in the US. This is in addition to the high amount of oil stock around the world, notably in the US (…) We continue to maintain our view that oil may have reached its peak in the short-run and prices are likely to consolidate over the next few weeks.”
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