Brent crude oil prices rose on Monday, rebounding from a four-month low after being dragged down by weaker-than-expected U.S. economic data. The recovery was driven by traders covering short positions early in the session to lock in profits.
According to data released by the U.S. Department of Commerce, orders for non-defense capital goods—excluding aircraft—fell by 1.3% in September, reflecting reduced corporate spending. This weak data initially pressured oil prices but failed to sustain a prolonged decline.
In December, the Brent crude oil contract fell below the January contract (LCOc1-LCOc2), marking the first time since June that the market showed a backwardation. A backwardation typically signals strong supply conditions and is considered more bearish than a traditional contango structure.
The December Brent contract climbed $0.32 to close at $106.23 per barrel, hitting a four-month low of $105.13 earlier in the session. It had dropped sharply by $3 on Friday. Meanwhile, U.S. crude oil for December gained just $0.01 to settle at $94.62 per barrel, reaching a four-month low of $94.06.
The price difference between Brent and U.S. crude widened to $11.61, with the spread closing at $11.30 on Friday. Analysts suggest that the current tightness in the Brent market reflects ongoing supply concerns, despite broader bearish trends.
Traders and analysts expect this week’s inventory report to show a sixth consecutive week of rising U.S. crude oil inventories. Despite the recent premium, the U.S. crude contract found some technical support on Monday, indicating potential stabilization.
Commerzbank recently lowered its 2014 Brent crude price forecast by $9 to $106 per barrel, citing continued global oil surplus conditions. However, geopolitical tensions in Libya have provided some upward pressure on prices.
On Sunday, November 3, leaders of the Beirute regional autonomy movement in Libya announced the formation of a federal government in the region, adding to the country’s political instability. Such developments often lead to increased volatility in oil markets, as Libya remains a key player in the global energy landscape.
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