(Bloomberg) — Oil held the biggest advance in a week as risk-on sentiment in wider markets overshadowed a mixed outlook for crude.
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Brent traded above $84 a barrel after rising 2% on Monday, while West Texas Intermediate was near $80. Equity markets are on a tear, with the S&P 500 hitting its 30th record this year, despite the Federal Reserve paring back expectations for rate cuts. The optimism in wider markets is helping crude.
Oil has advanced this month, paring a quarterly drop, as OPEC+ agreed to extend supply cuts, with any subsequent decision to return barrels dependent on market conditions. Demand in Asia appears a touch soft, with signs of lower gasoline consumption in India, and slower Chinese refining activity. In addition, data from China on Monday saw industrial activity expanding less than expected.
“We think Brent oil futures will average $80 to $85 a barrel in the second half,” said Vivek Dhar, an analyst at Commonwealth Bank of Australia. “Our fairly stable price view is largely driven by OPEC+ supply policy mitigating any shifts in global oil demand growth.”
Brent’s prompt spread — the difference between its two nearest contracts — suggests underlying near-term strength. The gap was 74 cents a barrel in a bullish backwardated pattern, about double the differential a week ago.
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