(Bloomberg) — Oil prices post their biggest weekly rise in a month as China releases better-than-expected macroeconomic data and Ukraine's attack on a Russian refinery raises geopolitical risks It hit a new high for the first time in four months.
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Brent, the global benchmark, rose towards $86 a barrel after rising 4% last week, while West Texas Intermediate rose above $81. China's factory production and investment grew more strongly than expected at the start of the year, data on Monday showed. In refining, processing achieved records.
Meanwhile, drone strikes in Russia hit several factories over the weekend, some deep in Russian territory. Diesel futures rose for a third session. The attack occurred as President Vladimir Putin won a landslide victory in a presidential election whose outcome was predetermined.
Oil prices have broken out of the narrow trading range that dominated the first few months of the year, with prices recently reaching their highest levels since November. This progress is supported by OPEC+ production cuts and a projected global budget deficit this year. Reflecting this change in tone, banks such as Morgan Stanley are gradually raising their oil price forecasts.
Vandana Hari, founder of Vanda Insights (Singapore), said: “The attacks on Russian refineries increased the risk premium on oil prices by $2-3 per barrel last week. “While this risk premium has increased, this risk premium remains in place.” Still, with a US monetary policy decision scheduled for this week, “economic sentiment could return to center stage in the oil complex.”
Crude oil time spreads suggest that conditions are tightening. The gap between Brent's two closest December contracts (this year's and 2025's) widened to $4.84 per barrel in bowerdation, a bullish pattern. That's up from $2.66 at the beginning of the year.
The recent rise in oil prices has been accompanied by a sharp increase in the number of outstanding contracts, known as open interest. Holdings soared to the highest level since October 2021, with an upward trend towards the end of last week.
Over the next few days, traders will get plenty of market insight from the CERAWeek conference in Houston on Monday. Speakers scheduled for the first day include the chief executives of Exxon Mobil, Saudi Aramco, Shell and Total Energy.
Meanwhile, the US Treasury sanctioned another tanker. This time, the Marshall Islands-flagged Lady Sophia, which the United States alleges was involved in transporting Iranian supplies in support of Yemen-based Houthi rebels.
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