Oil prices remain somewhat steady as the U.S. stimulus package balances the market in the midst of uncertainty due to weaker demand; the vaccination processes in Europe, U.S. and many other countries, as well as the OPEC+ agreement on higher output are also factors for oil balanced prices.
The U.S. stimulus package was cheered by the industry, especially on those aspects regarding solar energy and renewables. After president Donald Trump tried to block the stimulus, Democrats said they’d push for a larger relief of $2000 payments. In the mid time, Mexico and Europe have started a massive vaccination rollout.
Brent crude was up 6 cents, 0,1%, and closed the session at $51,3 a barrel, after hitting a high record of $52,02 early in the session. The West Texas Intermediate, on the other hand, fell 19 cents, 0,4% to $48,04.
According to experts like Jeffrey Halley, oil analyst at broker firm OANDA, “The signing of the U.S. stimulus bill, with the possibility of an increased size, should put a floor under oil prices in a shortened week,” he said, quoted by Reuters.
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Stimulus package, OPEC+ agreement and vaccine should put a floor on oil prices
As we reported previously, oil was in a rally; hitting high records after the historic crash of April-May, when Brent fell to $22 per barrel and WTI fell to a minus -30 per barrel. In early December, as the vaccine boosted hopes for a speedy recovery, prices started to go up. Brent crude hit a high record of $52,48 a barrel on December 18.
Nevertheless, as soon as a new strain of the SARS-Cov-2 virus was discovered in Britain, and further on in Italy, Germany and other countries, lockdown measures became more severe, hitting demand once again.
In this regard, oil demand remains vulnerable as the control of the virus is still to be seen. Countries like Brazil, Mexico and the U.S. have been hit severely by the virus. Germany, Italy, and other countries in Europe will remain at lockdown until mid-January.
Still, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+ have agreed on maintaining global production cuts until January; and then boosting it by 500,000 barrels, and an increase of the same amount in February.