Oil extends gains as optimism over U.S. stimulus lifts global markets

Darnell Taylor
March 25, 2020

But some analysts struck a note of caution, as demand continues to decrease with more countries imposing lockdowns to curb the spread of COVID-19 while Saudi Arabia and Russian Federation are also no closer to ending their price war.

Global benchmark Brent crude was trading at $27.85 per barrel at 0615 GMT for a 2.57% increase after closing Tuesday at $27.15 a barrel. "Increased volatility, diminishing effect of ever lower prices on U.S. tight oil supplies and potentially more clarity on the size of demand destruction due to COVID-19 spread, are other factors that might nudge Russian Federation in that direction", it added.

US crude CLc1 rose to a high of $25.24 a barrel early in the session and was at $24.86 a barrel, up 85 cents, or 3.5%, at 0732 GMT.

Oil prices also got a boost from USA moves to halt the economic impact of the COVID-19 pandemic.

"No one has a handle of how much the world will come to a halt", Edward Moya, senior market analyst at OANDA in NY, said. "It will probably be impossible for oil prices to continue to stabilize".

Earlier in the session both Brent and WTI were trading up over 5%.

TN COVID-19 positive count goes up to 18
It is the latter cases - often requiring ventilators and specialized care - that threaten to overwhelm hospitals. Homeless and destitute people will receive hot, hygienic food in the facilities that they are now put up at.

The Fed on Monday rolled out programs including backing for corporate bond purchases for the first time.

The U.S. Congress may vote on Wednesday on the $2 trillion stimulus after Republicans and Democrats said they were close to a deal, with optimism over the package fueling a surge in stock markets.

"Threats of increasing supplies by OPEC and Russian Federation are other downside risks for the market", they added, after the Organization of the Petroleum Exporting Countries and Russian Federation failed to extend an agreement to cut production and support prices beyond end-March.

Saudi Arabia now plans to boost exports, although they have yet to increase in March, sources at companies that track oil flows said on Monday.

The weekly report from the Energy Information Administration (EIA) is due at 10:30 a.m. on Wednesday.

Industry group the American Petroleum Institute (API) is scheduled to release its supply report at 2030 GMT, followed by the USA government's figures on Wednesday.

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