Oil rose the most in nine months, buoyed by a broader market rebound and signs of progress in stemming the pandemic’s spread.
U.S. crude futures climbed 5.6% in New York on Monday, the biggest one-day advance since early November. With concerns about China’s wealth crackdown easing, investors rushed into stocks and commodities. Meanwhile, the world’s most populous nation quashed domestic virus cases to zero while U.S. regulators granted full aproval to the nation’s most widely used Covid-19 vaccine.
“Today is a big snap back,” said Leo Mariani of KeyBanc Capital Markets Inc. Oil’s scorching rally over the first half of the year ran into stiff headwinds in recent weeks on concerns the resurgent virus could prompt OPEC and its allies to pull back on supply increases. Traders will be watching the Federal Reserve’s annual Jackson Hole symposium that starts later this week for clues to any changes in policy by central bankers.
“We’ve seen quite some pressure in recent weeks with Covid dominating headlines again,” said Hans van Cleef, senior energy economist at ABN Amro Bank. “So that could also explain a big part of today’s support. Bargain hunting and a spillover from the positive sentiment in other asset classes.”
The delta variant has also weakened the oil futures curve. The prompt time spread for Brent was 44 cents a barrel in backwardation — where near-dated contracts are more expensive than later-dated ones. That compares with 92 cents at the end of July. Goldman Sachs Group Inc. said in a note that prices had “overshot time spreads to the downside, suggesting an oversold market.”
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