Biden Inauguration Causes Oil Price Increase And "Good Mood" In Markets

Meanwhile, India's crude imports soar due to huge demand resurgence: File Image/Pixabay

As expected, Wednesday's inauguration of Joe Biden as president of the U.S. had a beneficial effect on oil; but the gains were minimal.

Still, the analytical community was buoyant over the change in administration: John Kilduff, founding partner at Again Capital, said, “There’s renewed hopes about the stimulus - there’s just a good mood in the markets overall, a sense of moving forward and that demand is going to be picking up.”

He was referring to the likelihood that Biden will soon enact a $1.9 trillion package designed to bolster the global economy as the Covid vaccination program slowly brings the pandemic to an end.

Phil Flynn, senior market analyst at Price Futures Group Inc., remarked, “I think the Biden administration on day one is making it clear that there’s a new sheriff in town and we’re going to go back to policies that are pro-green energy and anti-fossil fuels.

“It’s going to mean higher prices and the market is starting to price in that reality.”

Biden is expected to take measures to curb the U.S. oil industry, re-enter the Paris climate accord, cancel a permit for the Keystone XL crude pipeline, and pause planned drilling in the Arctic.

Brent on Wednesday settled up 18 cents at $56.08 per barrel, while West Texas Intermediate crude settled up 26 cents at $53.24 per barrel.

Meanwhile, several factors bode well for further price gains this week: trade sources reported that India’s crude oil imports in December soared to the highest levels in nearly three years to over 5 million barrels per day (bpd) as refiners increased output to meet reinvigorated fuel demand.

Also, analysts polled by Reuters estimated that crude stocks fell by 300,000 barrels in the week to January 15; official government figures will be released Friday.

But as usual, concerns over demand remained a key talking point, and Lachlan Shaw, head of commodity research at National Australia Bank, said that  “The risk right now is around coronavirus lockdowns: we’ve seen some countries extending lockdowns.”

While that is indeed the case, global inoculation continues to progress: as of Wednesday over 46 million people have been vaccinated; 30 percent of Israel's entire population has received the jab, as have over 5 million people in the UK.