Oil pushed higher with support from a weakening dollar as investors weighed on a weakening short-term demand outlook against an eventual rebound as Covid-19 vaccines were rolled out.
New York futures increased by more than $ 48 a barrel, although liquidity was low during the Christmas and New Year periods. A fall in the dollar has strengthened the attractiveness of commodities such as oil priced in the currency. Ru was also helped by broader market strength, with shares on the way to a record after US President Donald Trump signed a $ 900 billion virus relief package.
However, the coronavirus rises steadily. Southern California is planning a closure, while Germany is concerned about its slow pace the deployment of vaccines could prolong the economic damage caused by the pandemic. The virus is also making a comeback in Asia, with Thailand stricter restrictions and South Korea’s daily death toll rises to a record.
Crude’s vaccine – driven rally has faltered over the past few weeks on signs that it may have come before the recovery in energy demand. The OPEC + alliance will also add another 500,000 barrels a day to the market from January, while Russia’s deputy prime minister said the country will support a further gradual increase in production in February.
Oil prices look a few months ahead instead of the short-term challenges, ‘said Ole Hansen, head of Saxo Bank’s commodity strategy. Stimulus measures “support the reflection trade, which is also part of the growing appetite for commodities.”
OPEC + will meet next week to decide on production levels for February, and traders will be looking for indications of changing sentiment among its members. In the longer term, Iran’s plans to increase oil production could undermine the Alliance’s efforts to increase production.