Oil prices rose more than 2 percent on Monday, supported by a rebound in the stock market as concerns of a trade war between the United States and China eased.
Brent crude futures rose $1.54 to settle at $68.65 a barrel. Brent prices gained 2.3 percent on the day, its largest daily percentage gain since March 21.
U.S. West Texas Intermediate (WTI) crude futures gained $1.36 to settle at $63.42, a 2.2 percent gain, its largest daily percentage rise since March 23.
“Once again we find the oil market being swept up in broader market sentiment,” said Matt Smith, director of commodity research at ClipperData. “After Friday’s flight from risk, the positive mood in equities to start the week is encouraging a rebound in oil, with a weakening dollar providing a further shot in the arm.”
The U.S. stock market broadly rose more than 1 percent as strength in technology shares and a softer stance by U.S. policymakers on China trade tariffs powered a rebound from last week’s selloff. Crude futures have recently tracked with equities.
Oil prices fell about 2 percent on Friday after U.S. President Donald Trump threatened new tariffs on China over Twitter, reigniting fears of a trade war between the world’s two largest economies.
Market participants also focused on an air strike on a Syrian air base over the weekend. Syria and Russia blamed Israel for carrying out an attack on a Syrian air base near Homs on Monday which followed reports of a poison gas attack by President Bashar al-Assad’s forces on a rebel-held town.
The Pentagon formally denied a Syrian state television report that the U.S. military had fired missiles at a Syrian government air base.
Concerns surrounding the implications of heightened conflict in Syria, whose main ally is Russia, drove oil prices higher, analysts said.
“It’s more instability in the global oil market and concerns about supply globally in a pretty strong demand environment,” said Rob Thummel, portfolio manager at energy investment manager Tortoise Capital in Leawood, Kansas.
Prices have been supported so far this year by healthy demand and supply restraint led by the Organization of the Petroleum Exporting Countries, which started in 2017 to rein in oversupply and prop up prices.
In physical oil markets, OPEC’s No. 2 producer Iraq said on Monday that it will keep prices steady for its May crude supplies.
WTI’s discount to Brent recently has widened to its largest since January, reflecting some of the investor caution over rapidly expanding U.S. output.
However, production from the prolific Permian basin may already be outpacing pipeline takeaway capacity and could prompt producers to slow down drilling.