Oil prices rose on Wednesday for the second day in a row, as the market expects the new US administration to “act largely” on the next COVID aid package.
Starting at 9:17 a.m. ET on Wednesday, which is the opening day for President-elect Joe Biden, WTI Crude rose 1.53 percent to $ 53.77, and Brent Brut prices traded above $ 56 a barrel – rising by 1.16 percent to $ 56.52, very close to the 11-month highs recorded last week.
The US dollar fell after being nominated for Treasury Secretary Janet Yellen on Tuesday, she told the Senate Finance Committee that the US should “act largely” in the future stimulus package. The weaker dollar makes crude cheaper for holders of other currencies, while the general sentiment of the rising market has sent investors and speculators to riskier assets, such as stocks and commodities.
On Wednesday, the market looked beyond the short-term oil demand scares caused by the continued deadlock 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 package of incentives in the US will result in a recovery of the world’s largest economy, and aid packages in other economies will also contribute to growth and, by extension, at the request of oil, later in the year.
Although it cut its oil demand forecasts for the first quarter and 2021, the International Energy Agency (IEA) said in its report on the oil market on Tuesday that “much more oil is likely to be needed, given our forecast for an improvement. substantial demand in the second half of the year. ”
“The market has given up another downgrade in global demand from the International Energy Agency, which said renewed locks to contain the pandemic would weigh on consumption in the current quarter,” Saxo Bank said on Wednesday.
“The market remains bidding for a combination of cuts in Saudi production and the prospect of greater fiscal stimulus, increased mobility and continued monetary easing, ultimately supporting demand. The biggest short-term risk is if they have been fully assessed at the current price level “, said the bank’s analysts.
By Tsvetana Paraskova for Oilprice.com
More top readings from Oilprice.com: