Oil Prices Continue Higher As Focus Shifts to U.S. Supply Data

Global government bonds were hit by a renewed bout of selling — driving the yield on the 10-year US Treasury to within a whisker of the 3 per cent mark — as the recent strength of commodity prices helped sustain rising inflation expectations.

Indeed, Brent oil reversed an early fall to climb above the $75 a barrel mark to a four-year high late in the session.

The rally for crude came even as the latest increase in US yields put the dollar index on course for its highest close since mid-January. The gauge rose for a fifth straight day amid mounting speculation that the pace of US interest rate rises could be faster than had been expected earlier this year.

Oil prices tumbled early on fears that oversupply could return. Iran’s oil minister Bijan Zanganeh said there would be no need to extend a pact between the Organization of the Petroleum Exporting Countries and non-OPEC producers if oil prices strengthened, the ministry’s official website SHANA reported.

US stocks surrendered modest early gains, with the tech sector once again coming under pressure, although losses were limited by optimism regarding the US earnings season and a further easing of geopolitical tension and fading worries about a US-China trade war.

That said, the oil prices remain bid primarily due to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).