Photographer: Angus Mordant / Bloomberg
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 rose more than $ 48 a barrel after falling 1.3 percent on Monday. A fall in the dollar has stimulated the attraction of commodities such as oil at foreign exchange prices. Crude was also helped by an improved overall market sentiment, after the House backed up more stimulus controls after President Donald Trump signed a $ 900 billion aid package.
However, the coronavirus continued to grow without interruption. Southern California is set to expand a blocking amid rising cases, 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 Russia’s deputy prime minister said last week that the nation would support a gradual increase in production in February.
“Renewed concern about the virus will limit oil growth in the near future” and the noise around Russia, which is supposed to favor the addition of more production in February, will not help either, said Warren Patterson, head of freight strategy at ING Groep NV from Singapore. Price movements will continue to be driven by Covid-19 developments, he said.
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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 while avoiding market flooding.
Brent’s three-month period was 15 cents a barrel in the contango, a declining market structure in which nearly dated prices are cheaper than those with later dates. The spread was down 27 cents earlier this month, with the change reflecting worsened market sentiment.