Yahoo Finanza Oil Price Fundamental Daily Forecast – US Stimulus Concerns Capping Gains; Underpinned by Reported Saudi Blast
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher shortly before the regular session opening on Tuesday after shrugging off earlier weakness.
Prices were pressured during the early futures session as concerns that a U.S. stimulus package might hit snags and rising coronavirus cases countered bullish signals from better compliance with a supply cut deal and ongoing vaccine efforts.
At 12:11 GMT, March WTI crude oil futures are trading $52.94, up $0.17 or +0.32% and March Brent crude oil futures are trading $56.05, up $0.17 or +0.30%.
Traders said the quick turnaround in prices occurred amid reports of a blast in Saudi Arabia, trading near 11-month highs.
Stimulus Package Concerns
Dampening recent bullish sentiment, U.S. Democrats are still trying to convince Republican lawmakers of the need for more stimulus, raising questions over when and in what form a package will be approved.
U.S. lawmakers agreed that getting COVID-19 vaccines to Americans should be a priority even as they locked horns over the size of a pandemic relief package. Democratic Majority Leader Chuck Schumer nevertheless warned the relief package may be four to six weeks away.
COVID-19 Update
The pace of new infections in the United States is showing signs of leveling off, but European nations have set tough restrictions to combat the spread of the coronavirus while vaccines are rolled out. China is reporting rising COVID-19 cases, casting a pall over demand prospects in the world’s largest energy consumer.
Still, there are areas where demand for oil remains strong. In India, crude oil imports in December rose to their highest in more than two years as the easing of coronavirus restrictions boosted economic activity.
OPEC+ Output Cut Compliance Improves
On the supply side, OPEC+ compliance with pledged oil output curbs is averaging 85% in January, tanker tracker Petro-Logistics said on Monday. The findings suggest the group has improved compliance supply curb commitments.
Saudi Blast Report
Prices move up slightly on Tuesday after reports of a blast in the Saudi Arabian capital Riyadh, although the cause remains unclear.
Daily Forecast
Traders are monitoring the reported blast in Saudi Arabia to see if there is an impact on supply.
There are also fresh worries over an oversupply of crude oil. “Through 2021, major supply and demand risks remain that threaten to jolt fundamentals into a much tighter or looser market,” Citigroup said in a note.
The bank cited the risk of higher supply if sanctions on Iranian crude are lifted, or U.S. drillers boost output from shale, against the bigger demand shock from the latest wave of lockdowns and restrictions.
At 21:30 GMT, the American Petroleum Institute (API) will release its weekly inventories data. Last week, the API reported an unexpected build in inventories. Traders will be watching the report to see if last week’s numbers were a one-and-done event, or the start of a bearish trend.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
