By Barani Krishnan
Investing.com – Oil prices were up for a seventh straight week, the longest winning streak in 20 months, as bets for economic recovery in 2021 were turbocharged by expectations that a new Covid-19 fiscal relief worth almost $1 trillion will pass Congress soon.
Printing more money at the expense of inflation has always been a prime ingredient for boosting commodity prices, and most natural resource markets this week were up on talk of the impending coronavirus stimulus as well as the Federal Reserve’s pledge to buy more bonds to help the pandemic-struck economy.
But crude prices have also been helped by the trade’s cherry-picking of positive data while ignoring any negative news, including that of huge inventory builds and spikes in Covid-19 infections and resulting lockdowns, that could hurt the market.
“Whether oil prices can remain as high and keep these gains is still questionable amid the demand destruction lockdowns are causing,” Bjornar Tonhaugen, analyst at Rystad Energy, was quoted saying on Friday.
Scott Shelton, energy futures broker at ICAP (LON:) in Durham, North Carolina, concurred with that view, adding: “With the lack of conviction from the oil market on its value, and unwillingness to take risk into year end, I think that we will be ‘following the herd’ for the foreseeable future.”
That “herd” meant an unbroken streak of weekly gains since the week ended Oct. 23, that has cummulatively upped benchmark crude contracts by as much as $14 a barrel or nearly 40%.
In Friday’s session, New York-traded , the leading indicator for U.S. crude, settled up 45 cents, or 0.9%, at $49.10 per barrel. The session high was $49.18 — less than $1 from the widely-anticipated $50 target of market bulls. WTI has not traded at $50 levels since February.
For the week, WTI was more than 5%. The accumulated gain over the seven weeks was around 36%. It was also the longest winning stretch for oil since April 2019.
London-traded , the global benchmark for crude, settled up 76 cents, or 1.5%, at $52.26 per barrel. For the week, Brent rose about almost 5%. Its total gain over the seven weeks was nearly 40%.
Oil prices have been on a tear for almost two months now on bets that people across the world might soon be able to travel freely as millions of doses of coronavirus vaccines were being prepared for delivery over the course of the next few weeks, after approval by relevant health authorities.
The gains have, however, come just as reports early this week showed hefty rises in weekly U.S. and stockpiles of fuel products and .
And while global producer group OPEC+ has managed to prevent its 13 members and 10 allies from arbitrarily raising production, the market still seems indifferent to steadily creeping Libyan output. There’s also the potential of Iranian crude shipments returning to the market by early 2021 if U.S. sanctions against Tehran are dropped by the incoming Biden administration.
That aside, U.S. — the gauge for determining forthcoming production — has risen 13 weeks out of the last 14, reaching 263 from last week’s count of 258.
by : Investing.com