Investing.com - Crude futures shot up on Monday after soft U.S. factory gauges weakened the dollar, while expectations for U.S. shale producers to cease production gave oil room to rise as well.
A weaker greenback tends to make oil a more attractive commodity in dollar-denominated exchanges, especially in the eyes of investors holding other currencies.
In the New York Mercantile Exchange, West Texas Intermediate crude oil futures for delivery in January traded up 3.75% at $68.63 a barrel during U.S. trading, up from a session low of $63.75 a barrel and off a high of $68.90 a barrel.
The January contract settled down 10.23% at $66.15 a barrel on Friday.
Support for the commodity was seen at $63.75 a barrel, the session low, and resistance at $73.56 a barrel, Friday's high.
Oil prices plunged last week after the Organization of Petroleum Exporting Countries said that it would keep its official production target unchanged at 30 million barrels a day, disappointing hopes the oil cartel would lower output to support the market.
The 12-member group is responsible for approximately 40% of global supply.
Concerns over weakening global demand combined with indications that OPEC producers will not cut output have weighed on prices in recent months.
Markets have assumed that Saudi Arabia championed letting prices fall in hopes less cost-effective U.S. shale producers would halt operations, and by Monday, expectations for North America fracking operations to shelve projects until prices rise gave oil room to post strong gains.
A weak dollar added to the commodity's rally.
U.K.-based Markit Economics reported earlier that U.S. manufacturing activity in November expanded at its slowest pace since January, as new export orders fell.
The Markit U.S. manufacturing purchasing managers’ index ticked down to 54.8 in November from 55.9 in October. Economists had forecast a decline to 55.0.
Meanwhile in the U.S., the Institute of Supply Management reported earlier that its manufacturing PMI dipped to 58.7 from 59.0 in October, though still better than expectations of 57.9, though the dollar slid on profit taking anyway.
Separately, on the ICE Futures Exchange in London, Brent oil futures for January delivery were up 3.13% at US$72.35 a barrel, while the spread between Brent and U.S. crude contracts stood at $3.72.