Thursday, 01 October, 2020

Oil prices up on $2 trillion USA stimulus optimism

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Ginger Lawrence | 25 March, 2020, 20:27

Brent crude was trading up 49 cents, or 1.8 per cent, at $27.64 a barrel.

India, the world's third largest oil consumer, ordered its 1.3 billion residents to stay home for three weeks as of Tuesday, the latest big fuel user to announce restrictions on social movement that have destroyed demand for gasoline and jet fuel worldwide.

US crude was at $23.58 a barrel, down 81 cents, or 3.4%.

The countries may run out of oil space to store oil as Saudi Arabia prepares to increase its oil production even as demand for energy continues to fall amid coronavirus outbreak.

Analysts remain pessimistic that oil prices will stage an extended recovery amid the worsening pandemic and the ongoing oil price war between Saudi Arabia and Russian Federation.

"Oil is clawing its way higher, mainly on the back of the weaker dollar that stemmed from the Fed's unprecedented measures", Edward Moya, senior market analyst at broker OANDA, told CNBC.

Magnitude 7.5 quake strikes off Russian far eastern coast
The Pacific Tsunami Warning Centre initially said hazardous tsunami waves were possible within 1,000 km of the quake's epicentre. A 7.5 natural disaster in Russian Federation poses no tsunami risk to California and the rest of the West Coast, officials said.

It joined several other banks in slashing their oil price forecasts on account of the collapse of an output curb deal amongst members of the Organization of the Petroleum Exporting Countries and allies, or OPEC+, as well as the demand hit from the virus.

The U.S. Congress may vote on Wednesday on the $2 trillion stimulus after Republicans and Democrats said they were close to a deal, with optimism over the package fueling a surge in stock markets.

The market is also facing the threat of increased supplies after the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russian Federation, a grouping known as OPEC+, failed to extend an agreement to cut production and support prices beyond end-March.

The end of the deal would allow Saudi Arabia, Opec's de facto leader, to race Russian Federation to increase oil production in a bid to grab a greater share of the market.

The weekly report from the Energy Information Administration (EIA) is due at 10:30 a.m. on Wednesday.

Industry group the American Petroleum Institute (API) is scheduled to release its supply report, followed by the US government's figures on Wednesday.