WTI oil displayed an incredible rebound on Monday with prices piercing above $46 per barrel after Russia and Saudi Arabia pledged to stabilise the saturated oil markets. With Russia and Saudi Arabia being the largest oil producers in the world, the prospects of a potential deal formed by these powers has generated sharp speculative boost in prices.
Investor sentiment was elevated during trading last week following the blockbuster non-farm payroll report of 255k which rekindled expectations over the Federal Reserve raising US rates before year end. Stock markets were propelled to near 12-month highs as the renewed risk appetite from rate hike expectations and optimism over central banks intervening encouraged investors to seek riskier assets.
With concerns still elevated over a potential decline in demand amid slowing global growth, most upside gains observed in oil could be capped. The terrible combination of oversupply woes and fears that demand may be waning could provide a foundation for bears to send WTI crude to unseen levels.