Logo of Phnom Penh Post newspaper Phnom Penh Post - Crude oil price up amid US stimulus, Covid vaccine rollout

Crude oil price up amid US stimulus, Covid vaccine rollout

Content image - Phnom Penh Post
Analysis by Golden FX Link Capital business manager Nhim Kosol.

Crude oil price up amid US stimulus, Covid vaccine rollout

The price of crude oil is expected to recover this week, largely due to US President-elect Joe Biden’s proposed trillions of dollars stimulus package to boost the economy.

In addition, Saudi Arabia’s pledge to cut oil production, the success of Covid-19 vaccine rollouts and the rise of consumer prices in China last month are all good signs for a recovery in the price of oil.

According to Reuters, the price of crude oil rallied late Friday after Biden proposed the stimulus package to counter the economic toll from the coronavirus outbreak.

It added to a weekly gain of $47.13 to $52.70 a barrel underpinned by the Saudi pledge for deeper output cuts by one million barrels per day in February and March.

The price of oil has increased from $33.60 to a recent high of $52.70. This rise of around 45 per cent since early November came after a series of Covid-19 vaccine breakthroughs raised optimism for a sustained rebound in fuel consumption, despite the rollout of jabs expected to take some time.

The recovery in energy demand hinges largely on the success of the distribution of shots, and complications in various vaccines programmes are affecting the trajectory of the rebound.

The speed, or lack thereof, of the vaccine rollout will play a key role in determining how quickly energy demand will rally in the coming months.

It will be interesting to see how high oil prices will rise without a substantial increase in demand and, if they do continue their upward path, just how long the Saudis will maintain their output cuts.

Crude might be looking for a fresh direction after last week’s strong gains. Markets are still positive on the crude price and Biden’s promise to lay out a fresh stimulus proposal last Thursday may keep sentiment buoyant.

Biden urged new assistance, including boosting stimulus cheques to $2,000 after an unexpectedly poor December jobs report that reflected a plunge in restaurant employment.

Meanwhile, China’s consumer prices rose last month after briefly declining in November, while factory gate deflation eased further, providing more evidence of the country’s economic recovery.

For trade recommendations this week, investors should buy crude oil at $51 to $52 a barrel and take profit at $54.50, with the stop-loss at $49.

MOST VIEWED

  • Kingdom's Covid cluster cases jump to 194

    The Ministry of Health on February 25 confirmed 65 new cases of Covid-19, with 58 linked to the February 20 community transmission. The latest cluster cases include nine Vietnamese nationals, five Cambodians, one each from Korea, Singapore and Japan, with the rest being Chinese. This brings the total number

  • Locations shut, dozens more Covid-19 positive

    The Ministry of Health has closed 23 locations in connection with the February 20 community transmission of Covid-19 and summoned for testing anyone who had direct contact with affected people and places. The number of discovered related infections has risen to 76, including 39 women. In a press release,

  • Preah Sihanouk hit with travel ban

    Preah Sihanouk Provincial Administration has announced a temporary travel ban to and from the province, except for ambulances and trucks transporting goods. The announcement came after prime minister Hun Sen called on people in the province to travel only if necessary, and that people not

  • Cambodia's Covid cluster cases rise to 137

    The Ministry of Health on February 24 recorded 40 more cases of Covid-19, with 38 linked to the February 20 community transmission. Of the 40, two are imported cases involving Chinese passengers. The 38 include two Vietnamese nationals and one Cambodian, with the rest being Chinese. This brings the total cases

  • AstraZeneca jabs touch down in Phnom Penh airport

    The first shipment of 324,000 doses of the AstraZeneca/SII vaccine which was provided through the Covid-19 Vaccines Global Access (COVAX) Facility was delivered to Phnom Penh International Airport on March 2. The rest of the COVAX provided vaccines will arrive in Cambodia at a later date.

  • Covid cluster raises alarm, health bodies urge vigilance

    The Ministry of Health and the World Health Organisation (WHO) in Cambodia have expressed great concern over the February 20 cluster transmission of Covid-19 in the community. Both entities appealed for vigilance and cooperation in curbing further spread of the virus. Ministry spokeswoman Or Vandine said