On Monday, both US WTI (West Texas Intermediate) and UK crude futures’ prices climbed as much as 2 per cent, extending their blistering rallies into a seventh straight session in a row with Brent crude surging past $60 a barrel for the first time since January 8, 2020 as investors’ optimisms seemingly had overstretched following deeper supply cuts from key producers alongside an unjustified euphoria over a $1.9 trillion pandemic stimulus bill from a Biden Administration.
In point of fact, latest rallies in crude oil futures’ prices appeared to be prompted by a paradigm transformation in both equity and commodity market landscape, while a rollout of a pandemic vaccine apparently had been driving both US and UK crude contracts higher since early-November last year.
Nonetheless, in the day’s rallies in crude oil futures’ prices were heavily encouraged by an upbeat global equity market with Wall Street scoring another record closing high, while market participants’ optimisms that a trillion-dollar stimulus bill might be imminent as early as by mid-March, had offset frets of a likely supply glut in a medium- to longer-term outlook.
Notably, US shale producers added drilling rigs and natgas wells for an eighth straight month in January in drives to benefit from an upbeat crude oil price, stoking possibilities of a steeper supply glut if the current lag in crude oil demands persist.
Crude oil rises on stimulus hopes
Citing statistics, in the day’s commodity market closure, Brent crude futures’ prices gained 2.1 per cent to settle down at $60.56 per barrel, while US WTI crude oil futures’ prices jumped 2 per cent to wind up the day at $57.97 a barrel.
Both US and UK crude oil contracts, which jumped more than 60 per cent since early-November, 2020, were harbouring at their highest levels since January 2020. Meanwhile, underscoring investors’ obsession that a trillion-dollar stimulus bill from US Government would abruptly ramp up economic activities despite landfalls of a still-raging pandemic outbreak, a senior analyst at Price Futures Group in Chicago, Phil Flynn said, “There is a sense that the glut of oil supply is disappearing more rapidly than anybody thought possible”.