Oil prices lifted on Monday as benchmark Brent climbed past $40 per barrel, with Joe Biden’s triumph in the U.S presidential poll sharpening investors’ interest and Saudi Arabia’s saying the pact of OPEC on production cuts could be modified to temper increasing supply.
Brent jumped $1.28 or 3.2% to $40.73 a barrel by 12:16 West Africa Time while drifted up to $38.40, adding $1.28 or 3.4%. West Texas Intermediate edged up by $1.26 or 3.4% to $38.40.
Bonny Light, Nigeria’s banner crude grade, was down by 89 cents or 2.21% at $39.36 at the previous session on Friday.
“Oil prices surged on Monday benefiting from a risk-on stance and a weaker U.S. dollar driven by Joe Biden becoming president-elect,” Giovanni Staunovo, UBS oil analyst said.
The Democrats candidate will assemble a task force on Monday in order to investigate the most pressing problem await him in January when he takes over.
Oil prices are buckling under the strain by newly ordered lockdowns in Europe targeting flattening the curve of coronavirus cases.
The new curbs come across as being poised to shove the prospect of world’s oil demand into the negative territory, IEA’s director for energy markets and security, Keisuke Sadamori, told Reuters.
“Major parts of the European continent are in lockdown. This would surely work toward the negative side,” he added.
In the meantime, the dollar fell, plumping a 10-week low and bolstering commodities denominated in the currency as traders in possession of other currencies found them more affordable.
Oil prices equally drew strength after Prince Abdualziz bin Salman, Saudi’s Energy Minister declared the OPEC+ agreement on oil output reduction could be reviewed to bring it back to its previous state if the cartel unanimously consented.
He said after being asked whether OPEC+, a league of the Organisation of the Petroleum Exporting Countries (OPEC) and its other allies led by Russia, would hold on to the current reduction of 7.7 million barrels per day (bpd) instead of paring them to 5.7 million bpd in January.
Prominent members of OPEC worry that Biden’s lifting of sanction on Venezuela and Iran could shoot oil output up, making the equilibrium in demand and supply difficult.
“While a Biden presidency increases the likelihood of Iranian oil supply returning to the market, this is not something that will happen overnight, and we still believe it’s more likely an end of 2021/2022 event,” ING said in a note.
The world’s biggest oil-importing nation, China, reported a 12% fall in imports for October compared with September.
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