Crude Bounces 2% as Market Clings to Infrastructure Bill Prospects

August 11, 2021
crude oil price at market

By Adedapo Adesanya

Crude prices rebounded by 2 per cent on Tuesday as American President Joe Biden’s $1 trillion infrastructure bill did a lot to counter fears of COVID-19 sweeping through China.

At the market yesterday, the price of the Brent crude went up by $1.70 or 2.46 per cent to $70.74, while the West Texas Intermediate (WTI) moved up by $1.95 or 2.93 per cent to $68.43 per barrel.

The market clung to the assumption that President Biden’s $1 trillion infrastructure bill will boost oil product demand and lift economic performance in the world’s largest oil-consuming nation in the short-to-mid term.

Investors across asset classes, including oil, appeared to welcome the Senate passage of an infrastructure package, sending it to the House of Representatives. The bill calls for $550 billion in new public-works spending above what was already expected in future federal investments.

It also includes $110 billion for roads, bridges and other projects, as well as $66 billion for rail, $65 billion for broadband internet, and $55 billion for water systems.

This came after earlier losses that resulted from fears of Chinese lockdowns which seemed to have subsided with the focus shifting to rising demand in Europe and the United States.

Also giving support was a monthly forecast from the US Energy Information Administration (EIA) that US job growth and increasing mobility have boosted fuel consumption so far in 2021.

American petroleum consumption is expected to average 8.8 million barrels per day in 2021, up from 8 million barrels per day in 2020, but will remain below 2019 levels through 2022 due to people working from home.

Still, the spread of the Delta variant of COVID-19 continues to breathe down the market with China, Australia, Thailand, among other countries continue to battle infections.

China, the world’s top crude oil importer, has stepped up mass testing as authorities try to stamp out a new surge of the virus while Australia has resorted to measures to enforce mobility restrictions.

The market will be expecting data from Wednesday that will provide an outlook about the condition and what investors can expect.

Investors will also pay close attention to weekly storage data, with the American Petroleum Institute expected to provide its earlier (as at press time) before the Energy Information Administration (EIA) will release official data on inventories Wednesday morning.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

Leave a Reply

airtel africa
Previous Story

Airtel Africa Lifts NGX Index by 1.58% to 39,176.62 Points

Naira parallel market
Next Story

Naira Exchange Rate Remains N510/$1 at Parallel Market

Latest from Economy

Don't Miss