Brent crude oil and West Texas Intermediate (WTI) were both trading up over 2% on Monday as optimism strengthened over summer fuel demand prospects and despite the dwindling potential for the U.S. Federal Reserve to cut interest rates.
On Monday at 12:06 p.m. EST, Brent crude oil was trading up 2.19% at $81.36, for a gain of $1.74 on the day, while the U.S. WTI benchmark was trading up 2.45% at $77.38, for a gain of $1.85 on the day.
Monday saw the effects of a strong dollar rally late last week after the release of Friday's U.S. jobs data, which some interpret as an indicator that we may be waiting longer for interest rate cuts from the Fed.
Earlier in the day, Goldman Sachs had predicted that Brent would rise to $86 over the summer season on strong consumer demand, which in turn would lead to a significant supply deficit in the third-quarter of this year.
"The increase in prices started as the U.S. wakes up and kicks off the new week. Investors on the other side of the Atlantic clearly dismiss the Euro weakness and the resultant dollar strength due to French snap elections," PVM oil broker Tamas Varga told Reuters.
"There is a growing conviction that demand will be buoyant as the summer driving season approaches leading to considerable stock draws," he added.
Monday's gains follow last week's third consecutive weekly loss, most of which was the result of the OPEC+ announcement that the expanded cartel could begin returning barrels to the market in October, which is contrasted by rising U.S. crude oil stockpiles.
Tensions in Europe, including a falling euro, which suggest short-term instability with European Union elections, and the calling of French snap elections also appear to be providing some upwards momentum to oil prices.
By Charles Kennedy for Oilprice.com
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