Oil prices rose on Tuesday, with Brent rising by $ 40 a barrel on the back of financial markets and a weak US dollar on election day.
As of 9:45 pm EST on Tuesday, WTI crude was up 3.53 percent at $ 38.13 and Brent crude was up 3.08 percent at $ 40.17, up from $ 40 for the first time in a week.
Oil prices fell in early trade on Monday as more European countries announced a lockdown, but US financial markets closed the oil high after a subsequent fall on Monday.
Oil prices rose on US election day on Tuesday as equity markets around the world and traders also pushed for election results.
Commenting on the rise in oil prices in the early hours of Tuesday, Tamsa Varga along with oil brokerage PVM told Reuters:
“All the hallmarks of a huge, logical and even inevitable short-covering have been born before the US presidential election.”
According to the analyst, Tuesday’s oil rally is specifically due to the US election, not to recover from the fall in oil prices last week.
Recessionary factors for oil are still very much in place, with Italy also tightening measures to curb the second coronavirus wave, but for now preventing a nationwide lockdown shortfall. Britain, Austria and Belgium joined France and Germany this weekend to announce a second lockdown in coronovirus cases. The market fears that the withdrawal of the lockdown will lead to a further decline in economic and oil demand.
In addition, Libyan crude oil production has increased by an estimated 800,000 barrels per day (bpd), rising by 100,000 bpd in the past few days, further pressuring oil prices from the supply side.
A bullish factor supporting the market on Tuesday is that Russia is reportedly considering the idea that OPEC + delays the easing of production cuts. Top executives of Russia’s oil companies discussed the future of the OPEC + deal with Russian Energy Minister Alexander Novak on Monday, including an option to extend the cuts, which is for three months until March 2021, cuts from January. According to the plan instead of reducing. Sources aware of the case told Russian news agency Interfax.
By Tsvetana Paraskova for oilprice.com
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