Crude oil soars after seven straight days of losses; energy stocks rally

Seeking Alpha2021-08-23

Crude oil prices rebound from their seven-day losing streak, largely fueled by a return of risk-on investor sentiment that has weakened the dollar despite demand concerns prompted by rising cases of the coronavirus delta variant.

October WTI crude(CL1:COM) +5.1%to $65.32/bbl, and October Brent(CO1:COM) +4.9%to $68.37/bbl.

ETFs:XLE,USO,UCO,XOP,VDE,GUSH,OIH,ERX,BGR,BNO

All five of today's top gainers on the S&P 500 are from the oil and gas sector: FANG+6.8%, OXY+6.7%, DVN+5.5%, APA+5.3%, MRO+5%.

A surging U.S. dollar was a factor in last week's broad selloff for commodities, but "a softer dollar prompted investors to rewind their positions," according to Sunward Trading chief analyst Chiyoki Chen.

Oil prices have "overshot time spreads to the downside, suggesting an oversold market," Goldman Sachs analysts including Jeffrey Currie and Damien Courvalin said overnight.

"Delta a transient event to oil demand [and] supply losses are persistent," Goldman says, forecasting oil will recover to hit new highs this cycle and maintaining its Q4 target for $80/bbl Brent.

But just as the resurgence in COVID-19 cases threatens demand, U.S. shale production appears to be climbing again.

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