Oil climbs almost 3% as recession fears begin to fade

Oil rose almost 3 per cent on Monday as US recession fears eased and some traders took the view that crude’s recent price slide was overdone with three straight weekly declines for the first time since November.

A healthy US jobs report for April helped oil to climb by about 4 per cent on Friday even though labour market strength could compel the Federal Reserve to keep interest rates higher for longer.

Brent crude was up $1.83, or 2.4 per cent, at $77.13 a barrel by 1200 GMT. US West Texas Intermediate (WTI) crude gained $2.06, or 2.9 per cent, to $73.40.

“Oil’s rebound follows energy stocks’ comeback on Wall Street last Friday after the US reported strong job data, which eased concerns about an imminent economic recession,” said CMC Markets analyst Tina Teng.

Brent had finished last week with a decline of about 5.3 per cent while US crude plunged by 7.1 per cent even after Friday’s rebound. Both benchmarks were down for three weeks in a row for the first time since November.

Ole Hansen, head of commodity strategy at Saxo Bank, said oil’s recent drop looked excessive.

OPEC’s latest monthly oil market report is due on Thursday, providing an updated reading on the demand and supply outlook. (Reporting by Alex Lawler Additional reporting by Sudarshan Varadhan Editing by David Goodman)