Oil prices hold steady on hopes of US stimulus

Traders show optimism about US policymakers having delayed putting the Covid-19 stimulus package to vote in an attempt to land a bipartisan agreement.

Photo: Jan Unger

Oil prices hold at a stable level Thursday morning but have increased slightly against Wednesday afternoon after US lawmakers postponed voting on an economic stimulus package worth USD 2.2 trillion in the hopes of landing a bipartisan deal in Congress.

Rising infection numbers are also stirring up demand concerns.

One barrel of European reference oil Brent trades for USD 42.26 Thursday morning against USD 41.82 Wednesday afternoon. US benchmark crude West Texas Intermediate sells at the same times for USD 40.14 relative to USD 39.89.

US Treasury Secretary Steve Mnuchin says, according to Reuters, that negotiations with House Speaker Nancy Pelosi on the Covid-19 economic aid package are moving forward.

WTI appreciated Wednesday after the federal Energy Information Administration published oil inventory figures for week 39, showing a larger-than-expected reduction on both crude and distillate volumes.

The Organization of the Petroleum Exporting Countries has from August increased its daily output quota by 160,000 after Libya resumed some of its production and Iran has boosted its exports, shows a report compiled by the news agency.

At the same time, ANZ Research writes in a note that Russia, an OPEC+ ally, has expanded its production beyond the combined cartel's output ceiling implemented in April.

"Increasing supplies from OPEC+ will be risking their rebalancing effort as the market is still grappling with weak demand," ANZ Research told Reuters.

In a survey taken by the news agency, 40 analysts and economists estimate that global oil demand will shrink by 8 million-9.8 million barrels per day compared to last month's consensus of 8 million-10 million bpd.

Meanwhile, the average Brent outlook for the rest of the year dips from last month's USD 42.75 per barrel to USD 42.48.

English Edit: Daniel Frank Christensen

Oil prices low on demand worries

Oil prices low on demand worries

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