Oil Rallies to 3-Month High

Oil Rallies to 3-Month HighOil Rallies to 3-Month High

Brent crude hit a three-month high on Monday, extending gains that have lifted crude benchmarks by more than a third from this year’s lows on an improving global outlook and stronger sentiment for a market recovery.

Front-month Brent crude futures traded as high as $39.50, the highest since early December, and were trading at $39.30 a barrel, up 58 cents from their last settlement. In January, prices fell to levels not seen since 2003, Reuters reported.

US West Texas Intermediate futures fetched $36.53 a barrel, up 61 cents from the last close. The day’s high of $36.72 was more than 40% above February lows. The May WTI contract settled on Friday at $35.92 a barrel, up 3.91%.

The gains were driven partly by a rally that took Asian equities to two-month highs. US energy firms also cut oil rigs for an 11th week in a row to the lowest since December 2009, as producers slashed costs.

Bets on rising Brent crude prices hit a fresh record high in the week to March 1, according to data from the Intercontinental Exchange, and major OPEC producers are privately starting to talk about a new oil price equilibrium of $50 a barrel, according to New York-based consultancy PIRA. But analysts warned the glut of physical oil could again weigh on prices.

“The past days’ oil price rally was from our perspective less related to a shift in fundamentals but a recovery of sentiment,” said Norbert Ruecker, head of commodities research with Julius Baer, adding the bounce did not yet herald a long-term recovery.