Market Analysis
Oil prices surged significantly on Monday, with Brent nearing $82 per barrel following a 2.5% jump. West Texas Intermediate, meanwhile, traded below $78.
The market eagerly awaits an OPEC report for insights into the current outlook, alongside the US Short-Term Energy Outlook expected later today and the International Energy Agency's monthly release on Wednesday.
Monday's rally came as traders opted to "buy the dip" after the recent largest weekly loss since early May, prompted by OPEC+'s decision to gradually increase supply this year. Concerns over demand and rising non-OPEC supply have pressured oil prices lower since April. Despite Russia's recent output exceeding agreed limits with OPEC+, the market remains cautiously optimistic, reflected in Brent's three-month spread in backwardation at $1.42 per barrel, signaling tight supply.
Attention also turns to the Federal Reserve's interest-rate decision on Wednesday amid a robust US economy and persistent inflationary pressures, which have tempered expectations of an imminent policy shift, bolstering the US dollar and further influencing oil prices.
Paraphrasing text from "Bloomberg" all rights reserved by the original author.