Oil Gains as President Joe Biden Assumes Office
By Adedapo Adesanya
Oil prices rose at the international market on Wednesday as Mr Joe Biden was sworn-in as the 46th President of the United States of America.
The Brent crude went up by 1.16 per cent or 67 cents to trade at $56.52 per barrel while the West Texas Intermediate (WTI) crude rose by 30 cents or 0.57 per cent to close at $53.28 per barrels.
The incoming Biden administration has made plans to introduce a better incentive in the next COVID-19 relief package. This was confirmed by the Treasury Secretary nominee, Ms Janet Yellen, when she told the country’s Senate Finance Committee on Tuesday that the administration intended to act big in the upcoming stimulus package.
Mr Biden has proposed a $1.9 trillion spending package, which faces a tough battle in a 50-50 Senate where Democrats will have control by virtue of Vice President Kamala Harris’s tiebreaker vote.
The majority of the day’s gain for oil can be attributed to the expectation of stimulus money.
The market, however, faces a tougher challenge as the continued lockdowns in many parts of Europe and the returns of restrictions in some parts of China is adding to fresh worries, which could further dampen the market’s mood.
This is not helped by the more worrying projection that the oil market is likely to remain in a supply deficit over the first quarter and the rest of the year due to a surge in demand in the second half of 2020 as economies began to recover from the coronavirus pandemic along with compliance with OPEC+ production curbs.
The International Energy Agency (IEA) said in its closely-watched Oil Market Report on Tuesday that much more oil is likely to be required, given its forecast for a substantial improvement in demand in the second half of the year.
But the combination of Saudi production cuts and the outlook for more fiscal stimulus, and increased mobility as time goes on is expected to eventually support demand.
Weekly data on US petroleum supplies will be released a day later than usual because of Monday’s Martin Luther King, Jr. holiday. The American Petroleum Institute (API) will release its report first, with official figures from the Energy Information Administration (EIA) to follow later on Thursday.