Oil up on US stimulus hopes, rising virus cases keep prices in check
[NEW YORK] Oil gained more than 1 per cent on Tuesday on the prospect the United States was nearing a deal on coronavirus relief, but the threat to demand from rising Covid-19 cases worldwide and increased Libyan output kept prices from moving higher.
November US West Texas Intermediate (WTI) crude futures settled at US$41.46 a barrel, up 63 cents, or 1.54 per cent. The more active December contract settled at US$41.70, gaining 64 cents.
Brent crude futures for December delivery settled at US$43.16 a barrel, rising 54 cents, or 1.27 per cent.
Investors are following negotiations between US House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over another US coronavirus aid package, said John Kilduff, partner at Again Capital in New York.
"If we get a deal, I think that would be supportive, and if we don't get a deal, I think that's going to be somewhat punishing for prices," Mr Kilduff said.
Prices picked up after Ms Pelosi said she was optimistic Democrats could reach an agreement with the White House that could get aid out by early next month. She added there should be an indication of a possible agreement later on Tuesday.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Still, skepticism over the impact of a deal on oil markets lingered.
"Even allowing for a fresh stimulus package, risk appetite could take a hit from an unfolding of the 'buy the rumour/sell the news' phenomena,'" said Jim Ritterbusch of Ritterbusch and Associates. "With this possibility in mind, we will be looking to short December crude at or above the US$42 mark for a trading turn to the downside."
The rebound in Covid-19 cases in Europe and North America that has sparked renewed lockdown measures kept prices from moving higher.
A ministerial panel of the Organization of the Petroleum Exporting Countries (Opec) and its allies, together known as Opec+, pledged on Monday to support the market in the face of the pandemic's hit to demand.
However, those countries plan on scaling back the size of its production cuts in January from a current 7.7 million barrels per day (bpd) to roughly 5.7 million bpd in January.
Opec member Libya, which is exempt from the cuts, is also ramping up production after armed conflict shut almost all of the country's output in January, pumping more oil into an oversupplied market.
Adding to supply worries, crude inventories rose by 584,000 barrels in the week to Oct 16 to about 490.6 million barrels, data from industry group the American Petroleum Institute showed, compared with analysts' expectations in a Reuters poll for a draw of 1 million barrels.
REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Energy & Commodities
Seatrium unit to fully redeem S$500 million worth of floating-rate bonds early
Anglo rejects BHP takeover bid as significantly undervalued
India rice prices at three-month low on shrinking demand
Gold prices set for weekly decline ahead of US inflation data
Pricey coffee is here to stay as hoarding, heat hit Vietnam supply
Oil settles higher as weak US economic growth offset by supply concerns