by Joseph Rokop
Oil prices trekked higher Monday, following their second straight weekly gain. The crude complex rallied alongside the stock market with support from a weak dollar, bullish comments from OPEC, a supply outage in Libya, and draws in U.S. stockpiles.
The front month WTI April contract settled at 63.91 on Monday, up 223 cents, or 3.5 percent from this time last week. The front month Brent April contract settled at 67.50, up 266 cents, or 3.9 percent. The WTI/Brent arb has rallied 250 cents this year, as bullish bets on the WTI have been ramping up, with hedge funds and money managers holding 478,160 long contracts in futures and options.
The U.S. Dollar Index, (DXH8) trading 89.90, continues to fall this year, breaking below a key psychological and technical support level at 90.00. The greenback’s inverse correlation with crude has significantly supported oil prices, as dollar denominated commodities are cheaper for foreign investors.
The RB April and HO April contracts also rallied alongside crude, settling at 2.00 and 1.99 on Monday. With heating season coming to an end, and driving season around the corner, RBOB is leading the complex higher, now trading at three-year highs.
As we turn the corner into a new week, here’s an inside look: