Oil prices jumped 3% early on Monday, snapping the longest losing streak since 2019 of seven consecutive settlements in the red, as investor risk appetite increased and the U.S. dollar softened.
A weaker U.S. dollar and China bringing local COVID cases back to zero after a month of drastic restrictions on movement encouraged crude oil buying in the market, which had settled lower on Friday for the seventh day in a row—the longest losing streak since 2019.
Last week, the strengthening U.S. dollar, the surging Delta variant cases in major economies, and the Fed’s signal that it would start tapering stimulus sparked a sell-off on the markets, with risk assets and commodities hammered the worst.
On Friday, Dallas Federal Reserve President Rob Kaplan said he might rethink his call on the Fed to start tapering the asset-buying program if the Delta variant slows economic growth.
China, the world’s top crude oil importer, reported zero local cases of COVID-19 after weeks of localized lockdowns and suspension of public transport services and flights, which took a toll on fuel demand.
“Crude futures resumed trading for a fresh week with an upward bounce as some buying on the dips crept into the broader financial markets after last week’s hammering of risk assets,” Vanda Insights said in a note early on Monday.
This week, the markets will be watching the Jackson Hole annual symposium of the Fed, which will be held virtually, for signs when the Federal Reserve might begin tapering the stimulus asset purchase program.
“While the virus remains a threat to the short-term demand outlook, despite signs of an improving situation in China, this week’s Jackson Hole summit may give the market some ideas about the timing of tapering,” Saxo Bank said in a market commentary on Monday.
By Tsvetana Paraskova for Oilprice.com
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