Oil Rises Above $80 for First Time in a Month

Oil climbed, building on its biggest weekly advance since early April and extending a short-covering rally, helped by risk-on sentiment in broader markets.West Texas Intermediate settled above $80 a barrel for the first time in a month, with the gain accelerating after prices broke through their 200-day moving average. Crude also got a lift from a rally in equities amid a dearth of supply and demand cues.

“Positioning in crude has improved from scorched Earth to apathetic, leaving it ripe for rallies based on macro inputs rather than fundamental improvements,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group.

Strong macroeconomic signals have also supported prices. US non-farm payrolls have performed better than expected, and key indicators show that inflation is cooling, though the Federal Reserve is holding interest rates steady and planning for just one rate cut in 2024.

Crude futures surged 3.9% last week, the first weekly gain in nearly a month. The rally was driven in part by a major bout of short-covering, with outright bearish wagers on the global Brent benchmark falling by the most since 2020. The rally reversed a sharp slump after OPEC+ signaled the potential return of some barrels to the market later this year, which forced key members of the producing group to clarify that they can pause or reverse production changes if necessary.

Oil had trended lower since early April on signs of robust supply, waning geopolitical risk from the Middle East as well as concerns over demand, particularly from China. But traders have bet that the worst is over for refining margins and stockpile growth.Chinese industrial output and fixed-asset investment posted slower growth, and oil refining fell to the lowest rate this year after more plants shut for maintenance.

China’s oil refining — known as crude throughput — is expected to be flat or fall this year for the first time in two decades, excluding a downturn in 2022 due to Covid-19, according to most market watchers surveyed by Bloomberg. The nation processed a record volume in 2023 as demand rebounded. Retail sales data offered some encouragement, picking up more than expected.


WTI for July delivery rose 2.4% to settle at $80.33 a barrel in New York.Brent for August settlement was 2% higher at $84.25.