Crude oil has risen to the highest level in more than a week in New York and London over the optimism that a deal could be in place for a new round of stimulus spending before the election.
The market also attracted some support from US stocks, which stalled after four weeks of decline, as well as a weak dollar that lowered the price in the greenback. Yet concerns over the epidemic have not gone away and renewed lockdown measures to counter the virus have limited benefits.
“There is hope in the market for a deal that is difficult for the petroleum complex,” said John Kilduff, a partner at Again Capital LLC. “It should help demand here.”
Oil recovery from an unprecedented crash earlier this year has slowed, with signs of a resurgent epidemic. Global Kovid-19 cases topped 33 million, as cases in New York are seeing a boom and the UK’s Health Minister refused to rule on more sanctions. On the stimulus front, House Speaker Nancy Pelosi expressed the possibility that a deal could still be in place, even though she said the White House would have to agree to spend “more”.
“A weak dollar, an increase in US equities, the idea that a deal could happen, are all positive things behind crude oil,” said Phil Streible, chief market strategist at Blue Line Futures LLC in Chicago. Nevertheless, “some kind of demand needs to be accelerated.”
Supply concerns have also been weighing on the outlook for crude prices. JPMorgan analysts cautioned against adding oil to the market, as Libyan production returns and the OPEC + alliance cut taping output in its next round.
Chris Beck, a member of Vitol’s executive committee, also said that the global amortization market is “incredibly squeezed” and is competing with large stockpills, echoed by Maryam Almaszade, CEO of Somer Trading. The demand for the oil has become “uncertain”, Beck said on a conference call organized by Dubai Consultant Gulf Intelligence.
The weakness in refining margins is one of the factors weighing Brent’s price against other grades. The global benchmark has slipped in Europe in recent weeks with discounts on the Middle Eastern Dubai marker and weak refining margins pushing some grades into temporary storage.
The actual barrels are showing some signs of strengthening in the market for crude oil. Mars Blend, a high-sulfur crude, exceeded its highest premium on Monday in Nymex oil futures by more than a week. Meanwhile, Poseidan crude is at the highest premium of WTI futures in more than two weeks.
STAY TUNED WITH US FOR MORE INTERESTING CONTENT ONLY ON DESINEW.XYZ