Oil prices rose more than two per cent on Monday, supported by a rebound in the stock market as trade war between the United States and China eased.
Brent crude futures rose to settle at 68.65 dollars a barrel. Brent prices gained 2.3 per cent on the day, its largest daily percentage gain since March 21.
U.S. West Texas Intermediate (WTI) crude futures gained to settle at 63.42 dollars, a 2.2 per cent gain, its largest daily percentage rise since March 23.
“Once again we find the oil market being swept up in broader market sentiment,” said Matt Smith, director of commodity research at ClipperData.
“After Friday’s flight from risk, the positive mood in equities to start the week is encouraging a rebound in oil, with a weakening dollar providing a further shot in the arm.”
The U.S. stock market broadly rose more than one per cent as strength in technology shares and a softer stance by U.S. policymakers on China trade tariffs powered a rebound from last week’s selloff.
Crude futures have recently tracked with equities.
Market participants also focused on an air strike on a Syrian air base over the weekend.
Syria and Russia blamed Israel for carrying out an attack on a Syrian air base near Homs on Monday which followed reports of a poison gas attack by President Bashar al-Assad’s forces on a rebel-held town.
The Pentagon formally denied a Syrian state television report that the U.S. military had fired missiles at a Syrian government air base.
Concerns surrounding the implications of heightened conflict in Syria, whose main ally is Russia, drove oil prices higher, analysts said.
Prices have been supported so far this year by healthy demand and supply restraint led by the Organisation of the Petroleum Exporting Countries, which started in 2017 to rein in oversupply and prop up prices.
In physical oil markets, OPEC’s No. 2 producer Iraq said on Monday that it will keep prices steady for its May crude supplies.
However, production from the prolific Permian basin may already be outpacing pipeline takeaway capacity and could prompt producers to slow down drilling.