Photographer: Angus Mordant / Bloomberg
Photographer: Angus Mordant / Bloomberg
Oil rose with the support of a weakening dollar as investors weighed in on a deteriorating short-term demand outlook against a possible rebound as Covid-19 vaccines were rolled out.
Futures in New York exceeded $ 48 a barrel, although liquidity was low in the period between Christmas and New Year. A decline in the dollar increased the attractiveness of commodities such as oil that are priced in the currency. Crude oil was also helped by a stronger market force, with equities toward a record after U.S. President Donald Trump signed a $ 900 billion virus relief package.
However, coronavirus continues to increase non-stop. Southern California will extend to blockade, while Germany worries about the slow pace of its the deployment of vaccines could prolong the economic damage from the pandemic. The virus is also being caused again in Asia, with Thailand tighten restrictions and the South Korean newspaper the death toll rises to a record.
The rally driven by the Crude vaccine has faltered in the past two weeks for indications that perhaps progress has been made in recovering energy demand. The OPEC + alliance is also expected to add 500,000 barrels a day of production to the market from January, while Russia’s deputy prime minister has said the nation would support a gradual increase in production in February.
Ole Hansen, head of commodity strategy at Saxo Bank, said oil prices “are advancing a few months rather than short-term challenges”. The stimulus measures “support the trade in reflation, which is also part of the growing appetite for goods.”
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OPEC + will meet next week to decide production levels for February, with traders looking for signs of a change in sentiment among its members. In the long run, Iran’s plans to increase oil production could undermine the alliance’s efforts to increase production.