The sharp recovery in oil prices has helped spur a broad market rally across Asia that continued today as the week began. Asia may have also been responding to dovish monetary policy statements coming out of the European Central Bank.

The slew of positive events prompted a rally in Asian stocks, where Taiwan’s TSEC 50 index surged the most by 1.78% to 7,894. China’s Shanghai SE Composite Index finished the day 0.75% higher at 2,938.51 while Hong Kong’s Hang Seng added up 259.63 points or 1.36% to settle at 19,340.14.

The recovery in the Asian markets came after stocks took a harsh beating last week following a deep slide in oil prices, which hit 12-year lows. However, the strong snowstorm that hit the U.S. over the weekend fueled expectations of an increase in oil demand in the coming days, which relieved anxiety over an oil glut somewhat. Oil, however, is sliding back down 3% as the trading week opens.

Troubled Euro Zone

Unlike Asian markets, European markets failed to reflect the same excitement as oil was quick to pare its early-day gains. Oil prices came under pressure as Iraq turned the oil oversupply fears into reality by pumping oil at record-high levels. Brent Crude fell by $0.94 to $31.24. U.S. crude is trading at $31.20.

Iraq is sparing no efforts to claim its share in the global oil market as its central and southern region posted a record output of 4.13 million barrels a day. The oil output has dimmed hopes of an oil price revival anytime soon. European indexes are trading mostly flat today.

Given the pressure, it is likely that U.S. markets will reflect negative sentiment, too. On Friday last week, the Dow Jones Industrial Average rallied by 1.33% or 210.83 points to 16,093.51. S&P 500 Index too surged by 2.03% to 1,906.90. US stock futures are slightly down in premarket trading.