Logo of Phnom Penh Post newspaper Phnom Penh Post - Crude oil price up amid US stimulus, Covid vaccine rollout

Crude oil price up amid US stimulus, Covid vaccine rollout

Content image - Phnom Penh Post
Analysis by Golden FX Link Capital business manager Nhim Kosol.

Crude oil price up amid US stimulus, Covid vaccine rollout

The price of crude oil is expected to recover this week, largely due to US President-elect Joe Biden’s proposed trillions of dollars stimulus package to boost the economy.

In addition, Saudi Arabia’s pledge to cut oil production, the success of Covid-19 vaccine rollouts and the rise of consumer prices in China last month are all good signs for a recovery in the price of oil.

According to Reuters, the price of crude oil rallied late Friday after Biden proposed the stimulus package to counter the economic toll from the coronavirus outbreak.

It added to a weekly gain of $47.13 to $52.70 a barrel underpinned by the Saudi pledge for deeper output cuts by one million barrels per day in February and March.

The price of oil has increased from $33.60 to a recent high of $52.70. This rise of around 45 per cent since early November came after a series of Covid-19 vaccine breakthroughs raised optimism for a sustained rebound in fuel consumption, despite the rollout of jabs expected to take some time.

The recovery in energy demand hinges largely on the success of the distribution of shots, and complications in various vaccines programmes are affecting the trajectory of the rebound.

The speed, or lack thereof, of the vaccine rollout will play a key role in determining how quickly energy demand will rally in the coming months.

It will be interesting to see how high oil prices will rise without a substantial increase in demand and, if they do continue their upward path, just how long the Saudis will maintain their output cuts.

Crude might be looking for a fresh direction after last week’s strong gains. Markets are still positive on the crude price and Biden’s promise to lay out a fresh stimulus proposal last Thursday may keep sentiment buoyant.

Biden urged new assistance, including boosting stimulus cheques to $2,000 after an unexpectedly poor December jobs report that reflected a plunge in restaurant employment.

Meanwhile, China’s consumer prices rose last month after briefly declining in November, while factory gate deflation eased further, providing more evidence of the country’s economic recovery.

For trade recommendations this week, investors should buy crude oil at $51 to $52 a barrel and take profit at $54.50, with the stop-loss at $49.

MOST VIEWED

  • ‘Kingdom one of safest to visit in Covid-19 era’

    The Ministry of Tourism on January 12 proclaimed Cambodia as one of the safest countries to visit in light of the Kingdom having been ranked number one in the world by the Senegalese Economic Prospective Bureau for its success in handling the Covid-19 pandemic. In rankings

  • Ministry mulls ASEAN+3 travel bubble

    The Ministry of Tourism plans to launch a travel bubble allowing transit between Cambodia and 12 other regional countries in a bid to resuscitate the tourism sector amid crushing impact of the ongoing spread of Covid-19, Ministry of Tourism spokesman Top Sopheak told The Post on

  • Kingdom accepts Chinese vaccine, PM first to get jab

    Prime Minister Hun Sen said China would offer Cambodia an immediate donation of one million doses of the Covid-19 vaccine produced by the Sinopharm company. In an audio message addressing the public on the night of January 15, he said Cambodia has accepted the offer and

  • Reeling in Cambodia’s real estate sector

    A new norm sets the scene but risks continue to play out in the background A cold wind sweeps through the streets of Boeung Trabek on an early January morning as buyers and traders engage in commerce under bright blue skies. From a distance, the

  • Quarantine site in north Phnom Penh inaugurated

    A four-building quarantine centre in Phnom Penh’s Prek Pnov district was formally inaugurated on January 6. The centre can house up to 500 people, according to Phnom Penh municipal governor Khuong Sreng. At the inauguration ceremony, Sreng said the municipal hall had cooperated with the Ministry

  • ‘Beware of WhatsApp fraudsters’

    The Ministry of Posts and Telecommunications warned members of the public who use WhatsApp to vigilantly guard against a new trick employed by hackers that involves the use of six-digit codes sent to potential victims via the popular messaging app. The ministry said hackers could