(Bloomberg) -- Oil posted the biggest gain in a week in New York amid signs that the U.S. may move forward with another economic stimulus deal that could bolster consumption.
Treasury Secretary Steven Mnuchin said that there are areas where compromise over a massive aid bill is possible and a “fair deal” could be agreed upon. Meanwhile, a recovery in the U.S. is seeing some momentum: new Covid-19 cases have decelerated by the most since the start of the pandemic and applications for unemployment benefits dropped to a pandemic low.
Further supporting sentiment, crude demand in Asia is almost back to pre-coronavirus levels, Saudi Aramco Chief Executive Officer Amin Nasser said Sunday.
Prices are supported by a “continued risk appetite,” said Bart Melek, head of global commodity strategy at TD Securities. “At least there are signals from Washington that imply growing likelihood that economic stimulus is pending.”
Oil is on the precipice of breaking through the top end of the range where it’s been stalling for months, but remains weighed down by the Covid-19 pandemic that’s casting doubt on a sustained economic rebound. Adding to price pressure, the OPEC+ alliance is unleashing crude back onto the market this month following historic output cuts.
“We have prices rallying, but it’s probably unlikely they are going to go to new highs,” Melek said. “OPEC has a great amount of spare capacity that they will move into the market along with growth.”
Prices
- West Texas Intermediate for September delivery rose 72 cents to settle at $41.94 a barrel
- Brent for October settlement climbed 59 cents to end the session at $44.99 a barrel
Yet, in a sign of recovering consumption, the quantity of commercial flights around the world rose almost 6% in the seven days to Sunday, according to FlightRadar24 data. The average number of 67,000 planes in the sky was still far below the more than 100,000 pre-Covid.
“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies,” Nasser said.
Other oil-market news
- Norway may not officially be part of the OPEC+ alliance to curb oil supply in the face of the coronavirus pandemic, but next month it looks like the Scandinavian country will do its bit toward helping the producer alliance to avert a global glut of crude.
- Equinor ASA appointed its head of technology and projects, Anders Opedal, to lead the company as Eldar Saetre retires after running the Norwegian state-controlled oil major for six years.
- Roughneck job cuts accelerated in July and the outlook may worsen as new Covid-19 cases stifle economic activity, according to the Petroleum Equipment and Services Association.
- Lebanon’s prime minister confirmed the resignation of his government as an outraged public demanded accountability for last week’s explosion at Beirut’s port, the biggest peacetime catastrophe in the nation’s history.
--With assistance from James Thornhill and Elizabeth Low.
To contact the reporters on this story:
Andres Guerra Luz in New York at aluz8@bloomberg.net;
Alex Longley in London at alongley@bloomberg.net
To contact the editors responsible for this story:
Jasmina Kelemen at jkelemen2@bloomberg.net
Jessica Summers, Stephen Cunningham
© 2020 Bloomberg L.P.
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