Oil is better helped by the dollar, despite the prospect of cloudy demand

Photographer: Angus Mordant / Bloomberg

Oil rose with the support of a weakening dollar as investors weighed in on the prospects of worsening demand in the short term relative to a possible recovery as Covid-19 vaccines are launched.

New York futures exceeded $ 48 a barrel, although liquidity was sparse between Christmas and New Year. A fall in the dollar has stimulated the attraction of commodities, such as oil, to foreign exchange prices. Crude has also been helped by a wider market power, with actions that are heading for a record after the signing of US President Donald Trump of a $ 900 billion package to eliminate the virus.

However, the coronavirus continues to grow without interruption. Southern California is set to expand a blockade, while Germany is concerned about its slow pace the launch of the vaccine could prolong the economic damage caused by the pandemic. The virus also returns to Asia, with Thailand tightening restrictions and the daily life of South Korea the death toll rose to a record high.

The rally sparked by Crude’s vaccine has faltered in the past two weeks, with signs that it has arrived before energy demand recovers. The OPEC + alliance is set to add another 500,000 barrels a day to the market in January, while the Russian deputy prime minister said the nation would support a gradual increase in production in February.

Oil prices “look a few months ahead, instead of short-term challenges,” said Ole Hansen, head of commodity strategy at Saxo Bank. The stimulus measures “support the reflective trade, which is also part of the growing appetite for goods”.

OPEC + will meet next week to decide on 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.