Oil futures rose sharply on Tuesday, setting prices for their biggest settlement since early March, as markets become more positive about the world’s ability to tackle the COVID-19 pandemic that has crushed oil demand. and its by-products.
A landmark stimulus package forged by the 27-nation European Union after marathon negotiations since Friday helped set the stage for a higher oil surge. Investors can also be more confident that countries can counter an increase in COVID-19 cases. Investors applauded the positive results of at least two experimental COVID-19 vaccines on Monday.
The catalyst for the overnight spike in crude is the stimulus package in Europe “that will fuel demand and allow risky behavior to drive markets higher and create economic forces that will burn more oil,” said Phil Flynn, senior analyst The Price market share. Futures group.
The EU has agreed to a € 750 billion ($ 860 billion) coronavirus rescue fund, and investors are also watching for developments with additional fiscal stimulus measures from the United States, which could help reduce the recession that has caused the pandemic.
In this context, West Texas Intermediate crude for delivery in August CL.1,
CLQ20,
On the New York Mercantile Exchange, it rose $ 1.43, or 3.5%, to $ 42.24 per barrel, after gaining 0.5% on Monday. If gains are sustained, the first month’s contract would close around its highest level since the end of March, according to FactSet data.
The August contract will expire at the end of the day’s session. September WTI crude CLU20,
which will become the first month, it was trading up to $ 1.44, or 3.5%, at $ 42.36 per barrel.
September Brent crude BRN.1,
ICE Futures Europe rose $ 1.51, or 3.5%, to $ 44.79 a barrel, after the global benchmark index rose 0.3% in the previous session. Brent’s Tuesday gain is also taking that grade oil to its highest levels since early March.
On Monday, the crude got a shot of new optimism on the back of reports on progress toward coronavirus vaccine candidates being developed by the University of Oxford and AZN,
as well as those in the likes of Pfizer PFE jobs,
and BNTX,
The global count of confirmed cases of the coronavirus causing COVID-19 rose to 14.7 million on Tuesday, according to data added by Johns Hopkins University, and the death toll rose to 610,292.
Oil prices rose on Monday due to “optimism that a vaccine for the new coronavirus will be ready for production this year,” Stephen Innes, head of global market strategy at AxiCorp, said in a market update.
“All the while, US production shows little sign of a comeback,” with data from Friday by Baker Hughes showing a weekly drop of just 1 in the number of active US oil drilling rigs, he said. The “offset” is COVID-19 headlines, which “build pressure before next month’s return of some supplies as OPEC + production cuts begin to ease.”
Looking ahead, “the pace of oil price improvement versus the real risks of virus demand is likely to remain slow, suggesting [that] Unless the epidemic curve flattens out and the lockout reverses, there remains a more significant downside than an upside price risk through the short-term contract, ”Innes said.
Weekly oil inventory data from the Energy Information Administration will be released Wednesday morning. The American Petroleum Institute, a trade group, will release its own figures on Tuesday night.
On average, analysts expect the EIA to report a 1.9 million barrel decrease in crude inventories for the week ending July 17, according to an analyst survey by S&P Global Platts. That would mark a second consecutive weekly decline. The survey also called for a 2 million barrel drop for gasoline stocks, but distillate inventories are expected to show a rise of approximately 280,000 barrels.
Back in Nymex, August RBQ20 gasoline,
added 4.2% to $ 1.2806 per gallon and August of HOQ20 heating fuel,
increased 3.9% to $ 1.2837 per gallon.
August of natural gas NGQ20,
It rose 1.9% to $ 1,672 per million British thermal units, seeking to regain some of the 4.5% it lost on Monday.
.
