By Adedapo Adesanya
Crude oil closed higher on Monday as the market tapped into signals that global economic growth supported the outlook for energy demand just as the United States said it was weighing options to address rising prices after the passage of a bill that is bullish for the commodity.
Brent crude rose 57 cents or 0.69 per cent to settle at $83.31 per barrel, while the West Texas Intermediate (WTI) crude grew by 44 cents or 0.54 per cent to $81.71 per barrel.
The market reacted when US President Joe Biden welcomed congressional passage of a long-delayed $1 trillion infrastructure bill, which may boost growth and demand for fuel.
The infrastructure bill will create “blue-collar” jobs, modernise roads and bridges, and transform the transportation system. The vast majority of the jobs created will not require a college degree, according to the American President.
He added that Americans will see the effects of this bill probably starting within the next two to three months.
Adding to bullish sentiment, China’s export growth slowed in October but beat forecasts, buoyed by rising global demand ahead of the winter holiday season and improvements in coronavirus-hit supply chains.
Further supporting prices was a decision by the Organisation of the Petroleum Exporting Countries and allies such as Russia, together known as OPEC+, not to speed up their planned production increases last week.
The alliance once again retained its monthly oil output of 400,000 barrels per day in December. This is occurring despite the White House’s appeal to increase supply.
Prior to this, the oil cartel had, in July, agreed to gradually ramp up oil production on a monthly basis by 400,000 barrels per day starting from August 2021 until the 5.8 million barrels per day production adjustment is phased out.
As Mr Biden’s calls to OPEC+ to produce more crude to dampen rising prices fell on deaf ears, he said his administration had “other tools” to deal with the higher price of oil.
US Energy Secretary Jennifer Granholm said on Monday that Washington was weighing its options to address high gasoline and heating prices in the United States, which some analysts say could involve tapping the US Strategic Petroleum Reserve.
Global demand for jet fuel also looks set to take off as more governments make air travel easier with reduced restrictions for coronavirus.
