Brent crude tops US$40 a barrel after Biden clinches US presidency

[SINGAPORE] Oil prices gained more than 2 per cent on Monday, with Brent futures rising above US$40 a barrel, after Joe Biden clinched the US presidency and buoyed risk appetite, offsetting worries about impact on fuel demand from the worsening coronavirus pandemic.

Brent crude futures for January climbed 82 US cents or 2.1 per cent to US$40.27 a barrel by 1.01am GMT, while US West Texas Intermediate crude for December was at US$37.98 a barrel, up 84 cents or 2.3 per cent.

Prices recovered from a 4 per cent decline on Friday, rising along with other financial markets after Mr Biden emerged as the winner in the US presidential race on Sunday.

"Trading this morning has a risk-on flavour, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate," said Michael McCarthy, chief market strategist at CMC Markets in Sydney. "The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda."

Mr McCarthy added that investors' focus is likely to turn to the renewed coronavirus outbreaks now that the US election is out of the way.

US President-elect Biden and his team are working on tackling the worsening health crisis. The United States became the first nation worldwide since the pandemic began to surpass 10 million Covid-19 infections, according to a Reuters tally on Sunday.

Separately, US oil production is set to climb as producers are tapping into a backlog of drilled wells left uncompleted to boost output. The number of operating oil and gas rigs in the United States rose for an eighth week last week, according to Baker Hughes.

REUTERS