(Bloomberg) — Oil rose the most in more than a week amid signs of progress on a U.S. stimulus deal that could buoy the ailing demand outlook.
Futures in New York advanced as much as 2.5% on Thursday, their biggest intraday jump since Oct. 13. House Speaker Nancy Pelosi said she and Treasury Secretary Steven Mnuchin are “just about there” on a deal for a coronavirus relief package even though the Senate still poses a hurdle. Prices were also bolstered after President Vladimir Putin said Russia’s ready to cut oil output further if needed.
”As we near a stimulus package, it sends a positive sign that the U.S. economy will continue to recover and U.S. domestic consumption of petroleum products will continue,” said Gary Cunningham, director of account management and research at Tradition Energy.
Any rally in oil prices still faces resistance from the threat of virus flareups worldwide. In a troubling sign for consumption, Neste Oyj Chief Executive Officer Peter Vanacker said that oil refiners need to cut more capacity, especially in Europe, as demand drops and capacity is added elsewhere. Meanwhile, toll road use in France posted the biggest year-over-year drop last week since July, according to data from Atlantia, which operates such roads.
Meanwhile, the number of Americans filing for unemployment benefits fell more than expected, pointing to a gradual recovery in the labor market.
While Pelosi and Mnuchin will pick up discussions of a stimulus package again Thursday, Senate Republicans remain the ultimate roadblock to enacting a roughly $2 trillion deal under consideration.
“Right now, oil has no direction, it’s gone nowhere in the last several weeks,” said Josh Graves, senior market strategist at RJ O’Brien & Associates LLC. “Traders are analyzing a number of different factors and they’re trying to paint a mosaic of where prices are going to be based on all of this noise that’s out in the market right now.”
China is showing signs of strengthening fuel consumption. Traders are buying up cargoes and sending them toward Asia’s biggest economy, hoping to capitalize on an expected surge in demand at the end of the year. Russia’s ESPO crude, a grade often purchased by Chinese refiners, traded at a premium of $2.20 to Dated Brent, traders said.
Meanwhile, some of the top voices in the oil and gas industry are calling for more support in stabilizing the energy market. Without mentioning OPEC+ by name, Rosneft PJSC Chief Executive Officer Igor Sechin said that the world economy and oil demand may start to recover next year, but “humankind needs to take coordinated actions to achieve such a result.”
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