Oil slips, set for 20% annual drop in tumultuous 2020
- by Emilio Sims
- in Money
- — Jan 1, 2021
"The signing of the USA stimulus bill, with the possibility of an increased size, should put a floor under oil prices in a shortened week", said Jeffrey Halley, analyst at broker OANDA.
West Texas Intermediate Crude oil futures for February are up $0.70 or 1.47% at $48.32 a barrel.
The American Petroleum Institute will release its preliminary data on United States crude inventories later today, and the Energy Information Administration will release its official report on Wednesday.
The dollar fell to its lowest in more than two years against the euro as currency traders looked past a new delay in USA stimulus cheques and maintained bets that additional financial aid was still likely.
Prices for 2020 bottomed in April as fuel demand collapsed due to the COVID-19 pandemic and a price war between oil giants Saudi Arabia and Russian Federation.
The Democrat-led U.S. House of Representatives voted to meet President Donald Trump's demand to increase direct COVID-19 aid payments to Americans hurting from the pandemic to $2,000.
Brent and WTI have more than doubled from the decade lows seen in April, recovering from a year in which WTI prices fell into negative territory for the first time, sending shockwaves across the market.
Oil stocks in the U.S. declined more than expected last week.
Oil prices could gain strength as vaccination programs around the world pick up steam next year, said Tony Headrick, energy market analyst at CHS Hedging LLC.
That is up from a poll last month that forecast a 2021 average price of $49.35 per barrel but little changed from Brent trading at around $51 on Thursday.
Still, concerns about coronavirus lockdowns are capping the gains.
A new variant of the virus in Britain has led to the reimposition of restrictions on movements, hitting near-term oil demand and weighing on prices, while hospitalizations and infections have surged in parts of Europe and Africa. Over the longer term, Iranian plans to hike oil output next year may undermine the alliance's efforts to raise production while avoiding flooding the market.
