Crude-oil prices tally a gain of more 2% as recession fears ease

Price action

• West Texas Intermediate crude for June delivery
  CL00,
  +0.07%

  CL.1,
  +0.07%

  CLM23,
  +0.07%
  rose $1.82, or nearly 2.6%, to settle at $73.16 a barrel on the New York Mercantile Exchange. Prices on Friday posted a gain of 4.1%.

• July Brent
  BRN00,
  

  BRNN23,
  ,
  the global benchmark, climbed $1.71, or 2.3%, to $77.01 a barrel on ICE Futures Europe.

• Back on Nymex, June gasoline
  RBM23,
  -0.01%
  rose 3.5% to $2.46 a gallon, while June heating oil
  HOM23,
  -0.16%
  gained 2.7%, to $2.38 a gallon.

• June natural gas
  NGM23,
  +0.53%
  added 4.7% to settle at $2.24 per million British thermal units.

Market drivers

A healthy U.S. jobs reports on Friday “gave a boost to market sentiment that had been beaten down in the past few weeks due to banking concerns,” StoneX’s Kansas City energy team, led by Alex Hodes, wrote in Monday’s newsletter.

The jobs data revealed a stronger-than-expected 253,000 rise in nonfarm payrolls in April, while the unemployment rate unexpectedly fell to 3.4% from 3.5%. A recovery by regional-bank stocks also lifted sentiment. Renewed pressure on banking stocks last week was seen as adding to fears of a potential economic downturn.

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A relief rally in the SPDR S&P Regional Banking exchange-traded fund
KRE,
+0.64%
has “significantly pushed back against recession risk,” said Stephen Innes, managing partner at SPI Asset Management, in a note. “Indeed, as concerns around U.S. banks decrease, the oil market has been getting pushed higher on almost a tick-for-tick basis.”

Nevertheless, a bullish tone to start the year based on excitement over China’s reopening following the lifting of strict COVID curbs has faded, he noted, observing that prices of Chinese base metals, such as iron ore and copper, have fallen toward 2023 lows since mid-April, despite decent China data.

Natural-gas futures rallied even more strongly than oil on Monday, stretching their gains after ending last week on a positive note.

“Natural-gas prices continue to turn a seasonal corner as the market’s focus shifts to warmer temperatures and the potential impact on cooling demand,” said Robbie Fraser, manager for global research and analytics at Schneider Electric, in daily market commentary.

Current weather models project warmer-than-normal conditions across most of the country over the next week, which “should translate to added cooling demand across much of the southern U.S.,” he said. “However, that also means a slight downturn in late heating demand for some northern parts of the U.S.”

Read: Natural gas ‘hysteria’ cools, just as demand is expected to heat up