London: Oil rose almost $1 a barrel on Monday to above $72 as prices rebounded from the previous session’s decline to a near two-month low, supported by a weaker US dollar.
Crude also recovered as European stocks bucked a three-day losing run, helping stabilise global shares, although euro zone sovereign debt worries remained close to the surface. Metals including copper rose.
“The market is bouncing a little bit, which you’d expect after Friday’s extremely overdone sharp fall,” said Christopher Bellew, a broker at Bache Commodities.“
“Although the market did appear to break a lot of technical support on Friday, I think this was a bit of a trap and we’ll make our way back higher.”
US crude for March was up 93 cents at $72.12 a barrel by 3:13pm. The contract fell as low as $69.50 on Friday, the lowest since Dec. 15. Brent crude rose 85 cents to $70.44.
A cold snap in the US mid-Atlantic region, an area heavily dependent on home heating oil and natural gas supplies, and escalating tensions between Iran and western nations also lent support to prices.
The US dollar was weaker against a basket of currencies. Dollar weakness makes crude and other dollar-priced commodities cheaper for holders of other currencies.
Major commodity markets are testing 200-day moving averages after sharp sell-offs in the past three weeks, but important support level appears to have held for US crude, as well as copper and gold.
“For now, we would venture to say that a measure of stability could be with us over the next day or two,” said Edward Meir, analyst at MF Global, in a report.
“However, most charts still look precarious and at best, rallies could return values back over broken trend lines with little assurance that these gains will be sustained.”
A blizzard dumped 2 ft (0.5m) of snow across much of the U.S. mid-Atlantic on Saturday, threatening record snowfall and leaving tens of thousands without power.
The United States and Germany have threatened carefully targeted new sanctions against Iran, which gave instructions on Sunday for the production of higher-grade nuclear reactor fuel.
Oil fell 2.7% on Friday as a tepid employment report in the United States, the world’s top energy consumer, heightened worries of a sluggish recovery in fuel demand. It has lost nearly 10% this year.