Oil jumps to 6%, reaching the longest losing streak since 2019

Oil prices jumped on Monday, hitting a seven-day streak of losses that was the worst since 2019 as the dollar retreated and traders bet the recent sale was exaggerated.

“News of zero new cases in China has certainly provided a tailwind, as it gives more light at the end of the Covid tunnel and some fresh air into the demand landscape,” Blue analysts noted Line Futures. “In addition, the US dollar has retreated from recent highs, underpinning the commodities landscape.”

West Texas Intermediate crude futures, the U.S. oil benchmark, gained $ 3.50, or 5.6%, to $ 65.64 a barrel. Earlier in the day it rose more than 6% to a session high of $ 66, at which point it was on track for its best day since November.

The sharp jump marks a turn last week, when the contract sank nearly 9% for its worst weekly performance since October and the second negative week at three. WTI ended Friday at its lowest level since May 20th.

Brent international benchmark crude rose 5.48%, or $ 3.57, to $ 68.75 a barrel on Monday, after posting its worst week since October.

The drop in oil came amid fears of a slowdown in demand as the Covid-19 delta variant spread, leading to further blockades in countries such as Japan and New Zealand. In addition, weak economic data from China, which is the world’s largest importer of crude oil, weighed on prices. The latest U.S. inventory report also showed an increase in gasoline stocks and an increase in production by U.S. producers.

But some Wall Street companies said the sale seemed excessive.

“We believe this price weakness is excessive and we believe it has more to do with the psychology of market participants than with any deterioration in key data,” Commerzbank analysts noted.

Goldman Sachs, meanwhile, said macro headwinds, including relaxation of reflection, and Covid’s concerns in China are obscuring the bullish context of oil and commodities.

“While liquidity is likely to remain low and the trend is not our friend at this time, we believe the fundamentals of micro commodities will outpace these macro trends as we move into the fall, pushing many markets like oil and base metals to new highs for this cycle, ”the firm wrote Monday in a note to customers.

Energy stocks jumped as oil rose and the group was the best performing S&P 500 sector, gaining more than 3%. Diamondback Energy and Occidental were among the best performers, with a rise of more than 6%. APA gained more than 5%.

The SPDR Oil and Gas Exploration and Production ETF and the VanEck Vectors Oil Services ETF each increased by more than 4%.

The energy sector fell more than 7% last week and has yet to regain its place as the group with the best performance this year. Energy was the best sector during the first half of the year, but has been hit hard in recent weeks and is now the fourth best sector for 2021, with subsequent financial, real estate and communications services.