Oil prices rose on Wednesday for the second day in a row as the market expects the incoming US administration to “act largely” on COVID’s next relief package.
On Wednesday at 9:17 am ET, which is the opening day of President-elect Joe Biden, WTI Crude rose 1.53% to $ 53.77 and Brent Crude prices were trading above $ 56 a barrel, 1.16% more than at $ 56.52, very close to 11-month highs last week.
The U.S. dollar fell after Treasury Secretary Janet Yellen’s nominee told the Senate Finance Committee on Tuesday that the United States should act on the next stimulus package. The weaker dollar makes crude cheaper for holders of other currencies, while bullish market sentiment also sent investors and speculators to riskier assets, such as stocks and commodities.
On Wednesday, the market was looking beyond short-term oil demand scares, caused by continued blockades in many parts of Europe and now returning to parts of China. On Tuesday, Germany extended its blockade until mid-February.
But market participants looked beyond the first quarter, hoping that a large stimulus package in the U.S. would result in a rebound in the world’s largest economy, and relief packages in other economies would also help. to growth and, by extension, to oil demand. course.
Although it cut its oil demand forecasts during the first quarter and 2021, the International Energy Agency (IEA) said on Tuesday in its oil market report that “it is likely that much more oil, given our forecast for substantial improvement in demand in the second half of the year. “
“The market set aside a further downturn in global demand growth by the International Energy Agency, which said renewed closures to contain the pandemic would affect consumption during the current quarter,” he said. Saxo Bank in early Wednesday.
“The market continues to bet on a combination of cuts in Saudi production and the prospect of greater fiscal stimulus, greater mobility and continued monetary easing that will ultimately support demand. The greatest short-term risk is if they have fully assessed the current price level, ”bank analysts said.
By Tsvetana Paraskova for Oilprice.com
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