Oil rises as much as 6%, breaking the longest losing streak since 2019

Oil prices rose on Monday, snapping a seven-day losing streak that was the worst for crude since 2019 as the dollar fell and traders bet the recent sell-off was overblown.

“The news of zero new cases in China has certainly provided a tailwind as it brings more light to the end of the Covid tunnel and a breath of fresh air to the demand landscape,” said analysts at Blue Line Futures. “In addition, the American dollar it has retreated from recent highs, propping up the overall commodity outlook. “

West Texas Intermediate Crude Futures, the benchmark US oil index, gained $ 3.50, or 5.6%, to settle at $ 65.64 per barrel. Earlier in the day, it was up more than 6% to hit a session high of $ 66, at which point it was on track for its best day since November.

The sharp jump marks a change from last week, when the contract plunged nearly 9% for its worst weekly performance since October and the second negative week in three. WTI ended Friday at its lowest level since May 20.

International reference Raw brent it advanced 5.48%, or $ 3.57, to $ 68.75 a barrel on Monday, after posting its worst week since October.

The oil crash came amid fears of a slowdown in demand as the delta variant of Covid-19 spreads, leading to further lockdowns in countries like Japan and New Zealand. In addition, weak economic data from China, which is the world’s largest oil importer, weighed on prices. The latest US inventory report also showed an increase in gasoline stocks, as well as a rebound in production by US producers.

But some Wall Street firms said the sale seemed overblown.

“We view this price weakness as excessive and believe it has more to do with the psychology of market participants than any deterioration in fundamental data,” commerzbank analysts said.

Goldman Sachs, meanwhile, said macro headwinds, including reflation, and Covid concerns in China are masking the bullish backdrop for oil and commodities in general.

“While liquidity is likely to remain low and the trend will not be our friend at the moment, we believe that constantly adjusting commodity micro-fundamentals – will trump these macro trends as we move into the fall, pushing many markets like oil and base metals to new highs for this cycle, “the firm wrote Monday in a note to clients.

Energy stocks it was on the heels of rising oil, and the group was the best-performing sector of the S&P 500, gaining more than 3%. Diamondback energy and Western they were among the best performers, with an increase of more than 6%. THAT earned more than 5%.

the SPDR Oil and Gas Exploration and Production ETF and VanEck vectors Oil Services ETF each rose more than 4%.

The energy sector fell more than 7% last week and has yet to regain its place as the best performing group this year. Energy was the best sector for the first half of the year, but has been hit hard in recent weeks and is now the fourth best sector for 2021, behind financial, real estate and communications services.