Crude oil recorded gains on Tuesday at London’s trading session, as news about the U.S Congress’ $1 trillion stimulus bill helped to bolster the American dollar and by extension, supported crude oil prices
Brent crude gained 0.30% to $43.69 as of 8: 20 AM GMT, even as West Texas Intermediate also gained 0.24% to $41.71, thereby reversing some losses recorded yesterday.
Stephen Innes, the Chief Global Market Strategist at AxiCorp, in a note to Nairametrics explained the favorable macros, that will help continue to boost global oil prices in the short term. He said:
“Oil markets are receiving support from expectations of the FOMC’s firmer commitment in the upcoming policy meeting towards allowing above-target inflation to occur for some time, which should be viewed as incredibly positive for risk assets.
“And oil prices will continue to draw support from the Fed’s dovish policy, which sees the US dollar move lower.
“Crude oil continues to sit in narrow well-worn trading ranges as traded volumes fall into the summer. Ultimately something will shake the trees and knock us out of the range trade syndrome.”
However, in order for crude oil prices to break out higher, there must be a significant flattening of COVID-19 caseloads around the world. Still, besides staying nervous over the absolute number of COVID-19 case counts globally, most traders have one eye trained on the US supply, as the first weekly increase in the US rig count could be a sign of things to come.