Oil Prices Rise On U.S. Stimulus Hopes, But Virus Fears Dog Market

Alexander Novak says second wave could upset a "stable" oil market: File Image/PixaBay

The prospect of another Covid-19 relief bill in the U.S. was enough on Monday to persuade crude traders to boost oil prices by 1 percent - but as has become the norm, the fear associated with rising infection rates capped the gains.

After Wall Street rallied due to House speaker Nancy Pelosi saying she thought a stimulus package could be reached with the White House, Brent settled up 51 cents at $42.43 per barrel, or 1.22 percent; West Texas Intermediate settled up 35 cents at $40.60 per barrel.

A weaker U.S. dollar, which moves inversely with oil prices, also supported crude futures.

Analysts on Monday expressed concern that infection rates in some U.S. states have jumped 25 percent, and Alexander Novak, energy minister for Russia, said although the global oil market had been stable for the past few months, a second wave of Covid posed "uncertainties."

Tamas Varga, analyst at PVM, remarked, "The speed with which the virus is spreading is the main concern for both health officials and financial investors."

But as always with pandemic news, while the focus is on rising rates in some parts of the world, regions experiencing declining rates such as Australia and Japan (or in Britain, where infections are high but hospitalization rates have dropped by 22 percent in the past three days) - are relatively ignored.

As usual, the energy sector continued to evolve despite an economy ruined by government-imposed Covid lockdowns: Devon Energy Corp. on Monday announced it will buy shale oil rival WPX Energy Inc. for $2.56 billion, in early 2021.

Rick Muncrief, chief executive of WPX, said, "We're building a combined company that has the capabilities to withstand all the headwinds but can really prosper in better times."

Monday also saw Siemens' standalone firm dedicated to facilitating the transition between traditional and renewable energy, Siemens Energy, make its debut on the Frankfurt Stock Exchange.