Crude Futures Rebounded Monday

Oil rebounded after dropping to the lowest in more than a year last week as traders look ahead to key reports on the market.

West Texas Intermediate rose 1.5% to settle at $68.71 a barrel while Brent climbed to settle at $71.84 a barrel. Oil’s recent plunge had been driven by signs of economic weakness in the US and China, endangering demand at a time of abundant supply.

Traders will get plenty of market insights this week as three prominent forecasters — OPEC, the Energy Information Administration and the International Energy Agency — publish monthly outlooks. The reports come at a time of deeply gloomy sentiment in the market, with money managers having turned the least bullish on crude in records going back more than 13 years.

“The latest selloff of nearly $9 a barrel has been a bit overexaggerated,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities. “The market is nearing an oversold condition and has perhaps fallen too far, too fast.”

Weather concerns have also emerged, posing potential risks to supply. Tropical Storm Francine has strengthened as it moved north in the Gulf of Mexico, and oil drillers have already started evacuating crews and halting some offshore crude production. 

At a major oil conference in Asia on Monday, top traders struck a cautious note. Trafigura Group said Brent crude is probably heading into the $60s soon, and Gunvor Group Ltd. sees supply outpacing demand. Meanwhile, Morgan Stanley cut its forecasts for the second time in a matter of weeks.

Prices:

• WTI for October delivery climbed 1.5% to settle at $68.71 a barrel.
• Brent for November settlement rose 1.1% to settle at $71.84.

Crude has tumbled over the past three weeks, joining other commodities and equities in a wide selloff. There has also been widespread softness in product markets, including US gasoline and European diesel. The weakness prompted OPEC+ to defer a plan to revive some production by two months.

“In oil, the fundamental physical picture is still intact, inventories are drawing,” Jeff Currie, chief strategy officer at Carlyle Group’s Energy Pathways, said in an interview with Bloomberg Television. “The financial market, however, is where the bearishness is, and it’s trading the forward outlook, not today.”