West Texas intermediate jumps amid Biden’s win on the presidential seat.
The WTI futures for December delivery hiked by an impressive 2.83% to $38.19 per barrel. The US benchmark fell under the critical threshold of $40 per barrel in the past weeks.
It is further weighed down by US election drama and looming oversupply that clouded prospects for bullish movements.
Similarly, the Brent crude futures for January delivery hiked by 2.64%, still quite steady above the critical point at $40.49 per barrel.
Oil price ended last week in a gloomy tone after retracing as much as 4%. Since then, prices became volatile while election winners remained vague.
After Biden’s clear-cut win following the lead in Pennsylvania, risk-on sentiment started to ignite in the market. Thus, providing support to the crude.
Investors seek the refuge of commodities and other risky assets, leaving the greenback to weaken.
The outcome of the Democrat president and a divided Congress, with the Republican party on the driver’s seat, is ideal among investors’ point of view.
The president-elect is expected to adopt policies in will provide a solution to the problem with Covid 19, giving hopes to a more swift solution to the health crisis.
This development could ignite the revamping of crude oil demand and provide support to the bleeding Brent and WTI prices.
Although, it’s going to be a long journey to reach this equilibrium.
Currently, the number of cases worldwide has exceeded 50 million, with steady high additions in the United States, Europe, and Asia.
Libya’s reopening of key oil fields is not helping to ease the problem of oversupply.
The country has reached the level that spectators have been avoiding to hear: it pumps about 1 million barrels per day. This is similar to its pre-pandemic output.
What Could Drive Oil Price Up?
With the recent developments, experts imply that a consolidating bullish pattern is not yet on-sight.
Oil price will continue to trade down the red as long as global demand remain sluggish amid the pandemic.
Experts added that the energy commodity would weather tough hurdles along the way. The only chance to boost prices is to trigger energy demand and refocus consumption behavior to crude.
This will not be easy to achieve, but there is always hope, economists added.
Currently, investors are keeping strict monitoring on the reports to be released by the American Petroleum Institute and the US Energy Information Administration scheduled on Wednesday.
