Oil prices kicked off the week with a strong rally, as Brent crude rose by 3.69% on Monday to trade at $66.27 per barrel at 11:00 AM (GMT), reflecting renewed optimism in the energy market.
The price jump followed growing investor confidence in global fuel demand, with analysts pointing to tightening supplies, geopolitical risks, and improved economic data from major economies as the main drivers.
WTI and Murban Crude Also Rally
West Texas Intermediate (WTI) crude surged even higher, gaining 4.03% to trade at $63.48 per barrel. Murban crude also saw a 3.30% uptick, settling at $66.65 per barrel during the same period.
These gains signal a bullish start for the oil market this week, with traders betting on further supply constraints and a pickup in industrial activity.
Natural Gas Dips Despite Crude Rally
In contrast, natural gas prices declined slightly. As of 11:11 AM (GMT), natural gas was down 1.34%, trading at $3.744 per MMBtu. The dip was attributed to mild weather forecasts in key consuming regions, which may reduce short-term heating demand.
What’s Driving the Surge?
Several key developments are fueling the latest surge in crude oil prices:
U.S.-China Tariff Cuts Spark Market Rally
The U.S. and China agreed to temporarily slash tariffs on each other’s goods, igniting a sharp rally in oil markets. On Monday, the White House confirmed that both countries would reduce tariffs by 115% while keeping a baseline 10% in place for 90 days. This move eased fears of prolonged trade tensions and boosted investor confidence.
Crude Prices React Positively to Trade Deal
As of 6:52 a.m. on Monday, WTI crude had jumped 3.13% to $62.93, while Brent climbed 2.93% to $65.79. The tariff truce also sent equity markets soaring, with Dow futures reflecting optimism over improved trade relations.
OPEC+ Cuts Keep Supply Tight
Production cuts by OPEC+ and unplanned supply outages continue to limit global crude output, tightening the market and pushing prices higher.
Geopolitical Tensions Add Risk Premium
Ongoing instability in major oil-producing regions has added a layer of risk to oil pricing, prompting traders to price in potential supply disruptions.
Strong Economic Data Lifts Demand Expectations
Better-than-expected manufacturing and employment figures from the U.S. and China have raised hopes for stronger oil demand in the near term.
Weaker Dollar Boosts Global Buying
The declining value of the U.S. dollar has made oil cheaper for foreign buyers, increasing global demand and supporting higher prices.
Ole Hansen, head of commodity strategy at Saxo Bank, said, “Crude oil jumps together with other pro-cyclical commodities on news the U.S. and China will temporarily lower tariffs.” He noted that while prices may rise further, current optimism could mark a short-term peak given uncertainties around a full trade resolution.
If these trends continue, analysts expect oil prices to keep climbing in the coming days.