Oil advances with equities as risk-on sentiment drives market - BNN Bloomberg

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Oil rose as appetite for risk assets pushed broader markets higher, ahead of key data this week that will shed light on supply-demand trends following the surprise OPEC+ production cuts.

West Texas Intermediate advanced above US$80 a barrel, recouping some of Monday’s decline. The dollar slipped, helping make commodities that are priced in the currency more attractive. The halt of almost half a million barrels a day of crude supply from Iraq’s semi-autonomous Kurdistan region is into its third week, and there are signs more negotiations are needed with Turkey before exports can resume.

Any delay in these flows returning to the market will add to supply concerns with the Organization of Petroleum Exporting Countries and its allies kicking off production cuts next month. It has already helped drive oil higher from a 15-month low in March, while a key pricing spread for benchmark Brent crude has jumped in recent days to signal a bullish market.

Oil’s gain “is an expression of cautious risk resumption,” said Vishnu Varathan, Asia head of economics and strategy at Mizuho Bank Ltd. “OPEC+ has now upped the ante and lifted the thresholds for oil to react to recession risks.” A slew of data starting with the U.S. Energy Information Administration’s short-term outlook later Tuesday will provide clues on the state of the market. OPEC and the International Energy Agency are also scheduled to issue monthly reports this week.

Brent’s December-December spread — the difference between futures for the final month this year and in 2024 — widened to US$5.45 a barrel. That compares with U.S.$2.53 a barrel three weeks ago.WTI for May delivery rose 0.8 per cent to US$80.34 a barrel at 9:55 a.m. in London

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