Signs that the global economy may be about to strengthen played a key role in improving sentiment. Topping the list was news that the Chinese government plans to keep growth at between 6.5 per cent and 7 per cent by borrowing more. Given its status as the world's biggest consumer of commodities, achieving this goal could provide a massive lift. There was also encouraging US payroll data to consider, together with rising speculation that the European Central Bank will soon announce more measures to stimulate the eurozone economy.
Good news has also emerged from the supply side. According to oil services company Baker Hughes (US:BHI), North American energy companies removed eight rigs in the first week of March, marking an 11th consecutive week of cuts that brought the total count down to the lowest level since December 2009. Non-Opec countries outside of the US have similarly been reducing capital expenditure in response to the downturn.
Don’t get carried away
Still, analysts were quick to warn investors not to get carried away. Morgan Stanley reckons upside will be limited by bloated global inventories and producer hedging, while Barclays believes Opec's celebrated production freeze policy isn't guaranteed to succeed.
Analysts there also poured cold water over China's short-term prospects, arguing that any fiscal expansion this year is likely to be moderate. And, in terms of the US payroll data, it sought to remind investors that commodity-consuming sectors still remain weak.
