Oil has climbed to its highest level since February as U.S. lawmakers considered a virus relief deal that could provide near-term vigor ahead of a wider release of the Covid-19 vaccine .
U.S. benchmark futures rose 1.1% on Thursday in line with broader market gain. Weak labor market data gave hope that Congressional leaders would complete another round of fiscal stimulus. Meanwhile, European authorities were said to be pushing for the release of vaccines before Christmas.
“Motivation is a big driver,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy. “As we see more incentive money coming through Congress, it gives more certainty to the improving U.S. economic situation and people getting back to more free costs.”
However, the road to normal oil demand remains crippled as viral issues spiral around the world, leading to tougher restrictions that impede movement. The U.S. raised 17 million total viral infections, and Tokyo raised the alert on the city’s medical system to a maximum of four levels. At the same time, technical indicators point to both Brent and West Texas Intermediate’s crude futures in an oversold area, indicating a potential pullback.
At the same time, the Bloomberg Dollar Index weakened by as much as 0.5%, increasing the appeal for commodities at the price of the currency.
INTRODUCTION: Oil gains with U.S. crude supply fall against fuel construction
“Dollar-denominated commodities across the board are getting pumped,” said John Kilduff, a partner at Again Capital LLC. “It’s good for demand, because it’s getting cheaper for countries like India that need to make money translating. This is a big cut for overseas crude oil buyers. “
The outlook is mixed for demand for the weakening of the Brent curve, which fell back in bearish contango structure for the first time in more than a week.
“It was a textbook going into a backyard, and you usually don’t see that when your investments are as high as they are right now,” said Jeff Currie, global leader. product review at Goldman Sachs Group Inc. Bloomberg television interview. “So I’m a little careful.”
However, physical markets appear to be strong as Indian refineries run at full tilt and Asian demand is driving the price of Russian, Middle Eastern and US barrels higher. Meanwhile, the rebalanced margin for gasoline and diesel against WTI was above $ 11 per barrel on Thursday to its highest level since July.
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