Early Asian trading on Monday saw a tiny increase in oil prices as concerns about a U.S. recession that had caused prices to fall for three weeks in a row for the first time since November started to fade. Brent crude prices were up 6 cents at $75.36 per barrel. West Texas Intermediate (WTI) oil futures for the United States were up 8 cents at $71.42.
Despite a remarkable recovery on Friday, which saw the benchmarks recoup roughly 4% each, concerns that the U.S. banking crisis could slow the economy and reduce fuel consumption in the world’s largest oil-consuming country drove the Brent benchmark down 5.3% and WTI down 7.1% last week. The decline in prices has been halted by a positive U.S. jobs report for April, a declining dollar, and expectations of supply cuts at the upcoming OPEC+ meeting in June, which brings together OPEC and its allies.
“Oil’s rebound follows energy stocks’ rebound on Wall Street last Friday after the United States reported strong job data, which allayed worries about an impending economic recession that had caused the selloff early in the week,” said Tina Teng, an analyst at CMC Markets. On Wednesday, the United States is anticipated to release data on consumer price inflation for April. Given widespread anticipation that the U.S. Federal Reserve will suspend rate hikes, this data may offer additional insights into interest rate movements.
Two reports on loan demand and credit conditions in the United States are also important and will be monitored more closely than usual due to the recent stress on the local banking sector. As market participants continue to assess the economic recovery in the second-largest consumer of oil in the world, traders will be closely watching Chinese economic indicators this week, including trade, inflation, lending, and money supply figures for April. According to CMC’S Teng, “Crude prices may continue to benefit from the rebounding tailwind.”