May 08, 2023 (MLN): Oil prices started the week strong, gaining momentum in the Asia trading session on Monday as market sentiment shifted amid easing fears of a U.S. recession, redirecting the focus toward tightening supplies.
This offered support to crude prices after they registered three straight weekly declines.
Brent crude climbed 1.9% to $76.54 per barrel. West Texas Intermediate crude (WTI) rose 2.04% to $72.71 per barrel.
The rise in oil prices can be attributed to a soft U.S. jobs report that was released on Friday.
Moreover, the U.S. dollar index (DXY) continued to decline and is currently 0.14% lower on the day, this has also contributed to the rise in oil prices as it makes dollar-denominated oil cheaper for investors holding other currencies.
It is pertinent to note the current rise in oil prices comes after both oil benchmarks declined for three consecutive weeks and closed the last week down by more than 6%.
Market participants are now monitoring the upcoming U.S. consumer price index (CPI) figures for April that will be released on Wednesday.
CMC Markets analyst Tina Teng stated that 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, as Reuters reported.
This positive sentiment was further reinforced by the implementation of voluntary output cuts by select members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+. These output cuts are set to begin this month, with the next OPEC+ meeting scheduled for June 4.
Additionally, OPEC is expected to release its latest monthly oil market report on Thursday, providing an updated assessment of the demand and supply outlook.
