U.S. crude futures rose to a six-month high early Monday as output disruptions were expected to dig into a long-standing overabundance in the market, while higher commodity prices improved energy and basic materials shares. Benchmark U.S. Treasury yield advanced after the dollar ticked lower and they matched a one-month low hit late last week, caught between a weaker yen and a stronger euro. Supply disruptions in Canada, Nigeria, and Venezuela have pushed oil production below consumption levels in May for the first time in over two years. What that means is that the world has consumed huge piles of oil that knocked as much as 70 percent off crude prices between 2014 and 2016.
The energy sector pushed Wall Street higher after the S&P 500 closed a third week long session of losses on Friday. Technology stocks also gave U.S. stocks support. The Dow Jones industrial average .DJI was p 121.32 points, or 0.69 percent, to 17,656.64. The S&P 500 .SPX gained 14.01 points, or 0.68 percent, to 2,060.62 and the Nasdaq Composite .IXIC added 41.56 points, or 0.88 percent, to 4,759.24. “A lot of the overnight data has been kind of weak and people have just roundly ignored it,” stated interest rates strategist Aaron Kohli, of BMO Capital Markets in New York. “Everyone was just focusing on crude this morning.”
Oil prices climbed more than 3 percent at the close of the morning trade. Goldman Sachs commented that disruption to supply cased the market to flip into deficit and U.S. crude CLc1 could trade as high as $50 per barrel in the second half of 2016. Benchmark Brent crude LCOc1 hit $49.47 per barrel, its highest price since late 2016. The international benchmark last traded $49.04, up 2.5 percent on the day and 80% since January. U.S. crude CLc1 was up 2.9 percent at $47.56 per barrel.