Brent oil gains with stocks after worst losing streak since 2018

Brent oil climbed amid a broader market rebound after capping the longest run of declines in more than three years on economic strains from the latest Covid-19 comeback and a stronger dollar.

Futures in London rose 1.8 per cent on Monday, rallying with equities in Asia and other commodities, after falling for a seventh session on Friday for the worst streak since February 2018. China has made progress in containing the fast-spreading delta variant, bringing local cases down to zero, but the coronavirus continues to impact other nations and cloud the outlook for fuel demand.

Oil’s scorching rally over the first half of the year has run into stiff headwinds recently and the resurgence may prompt OPEC+ to reassess its pledge to keep boosting output each month. The group next meets on September 1. The market will also be looking toward the Jackson Hole symposium from Thursday, which may offer insights into how the Federal Reserve plans to taper bond purchases.

“There’s a bit of buying on the dips across risk assets,” said Vandana Hari, founder of energy consultant Vanda Insights in Singapore. “OPEC+’s move will depend on the quantum of price recovery and its sustainability, but the chances of a temporary suspension of the supply boost are looking quite strong.”

Prices

• Brent for October settlement rose 1.8 per cent to $66.34 on the ICE Futures Europe exchange at 11.16am in Singapore after slumping 7.7 per cent last week, the most since October.
• West Texas Intermediate for October delivery gained 1.3 per cent to $63.12 on the New York Mercantile Exchange after losing 2.1 per cent on Friday.
• The Covid-19 flare-up has also weakened the oil futures curve. The prompt timespread for Brent was 45 cents a barrel in backwardation – where near-dated contracts are more expensive than later-dated ones. That compares with 92 cents at the end of July.

Asia is set to send excess diesel supplies to Europe and possibly to the US as the delta variant dents demand. The price of the industrial fuel in Singapore slumped relative to those in Europe, incentivizing the flow of oil westward, partly due to each region’s current state of recovery from the pandemic.