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Oil Mixed At The Beginning Of The Week

Vladimir Zernov
·2 min read

Oil Video 28.12.20.

U.S. Stimulus And The Start Of Mass Vaccination In Europe Provide Support To Oil

Oil is currently trying to stay above the $48 level as U.S. stimulus and mass vaccination in Europe serve as supportive catalysts.

U.S. President Donald Trump has signed the coronavirus aid package on Sunday. Previously, he wanted to increase the amount in stimulus checks from $600 to $2,000 per person but failed to get bipartisan support.

The new stimulus is bullish for the oil market as it will provide immediate help to the consumers and the economy. The recent data from EIA indicated that demand for gasoline has started to stabilize which could provide additional support to the market. At the same time, it is not clear whether demand will continue to rebound in the upcoming weeks.

Meanwhile, the start of mass vaccination in Europe provides hopes that demand will normalize in this part of the world although it is too early to expect any serious results. Most likely, first-quarter demand data will look ugly in Europe.

The $50 Level Is Already In Sight

The big picture has not changed for the oil market in recent weeks. The current situation remains tense due to the negative impact of virus containment measures in Europe and the lack of travel demand.

At the same time, developed countries have already started their mass vaccination programs, and more vaccines are on the way which means that demand for oil will increase significantly at some point in the future.

The key question is whether traders’ optimism is sufficient enough to push oil above the $50 level. At this point, it looks like a viable scenario. Oil is already close to this psychologically important level, so bulls will certainly try to get to $50.

It should be noted that Brent oil has already managed to settle above the $50 level. WTI oil is trading at a discount due to the pressure from U.S. shale oil companies which can quickly increase production, but it remains to be seen whether U.S. domestic oil production will be able to get far away from the current level of 11 million barrels per day.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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