Crude oil prices began the week with gains as traders took a breather following last week’s selloff. Adding to the upward momentum, a weather system in the Gulf of Mexico is being monitored, as it may turn into a hurricane before making landfall.
By midmorning in Asia, Brent crude had climbed over 1% from Friday’s closing price, while West Texas Intermediate (WTI) was up around 1.30% from last week. Both benchmarks suffered losses of about 10% the previous week, a selloff that Bloomberg described as “brutal.”
“Crude oil experienced its steepest weekly decline in 11 months, driven by a gloomy economic outlook,” ANZ analysts commented in a note cited by Reuters. “Weak U.S. jobs data on Friday raised concerns about declining oil demand in the world’s largest consumer.”
The U.S. Labor Department’s latest report revealed that 142,000 new jobs were added in August, falling short of expectations. However, the rise in unemployment was smaller than predicted, fueling hopes that an interest rate cut could be on the horizon.
Morgan Stanley analysts, quoted by Bloomberg, noted, “OPEC+’s decision to delay the start of its planned output increase suggests that the group remains focused on stabilizing the market. Unless demand drops further, we expect Brent to stay around the mid-$70 range.”
Despite last week’s selloff, the decline continued even after OPEC signaled it would not start increasing supply from October. Additionally, the Energy Information Administration (EIA) reported another large drop in U.S. crude oil inventories for the last week of August, yet prices remained under pressure.
This week, several key reports will likely influence oil prices. Both OPEC and the International Energy Agency (IEA) are set to release their latest monthly market updates. The EIA will also publish its Short-Term Energy Outlook. OPEC and the EIA’s reports are expected on Tuesday, while the IEA’s Oil Market Report will be released on Thursday.