Oil prices increased by about $1 as a wave of optimism hit the global market. This came after the U.S. government managed to make progress on the covid relief bill.
The Brent Crude saw the oil price rise by 0.71% or 46 cents. They now come at a price of $64.88 per barrel. The US WTI showed a rise of 22 cents resulting in a price of $61.72. This means there has been a growth of 0.36% in the oil price.
The Reasons For The Oil Price Rise
The United States House of Representatives managed to pass a 1.9 trillion dollar relief bill for covid. The Democrats had made use of a special procedure to avoid putting the bill to vote. As such, the global market was immensely enthusiastic over the injection by one of the world’s leading countries.
The market is optimistic that this would further increase the need and demand for vaccines around the world, and so increasing the demand for oil. The US CDC has also approved of widespread use of the covid shot by Johnson & Johnson.
On the other side of the world, studies in Japan are showing an expansion of factory activity as being the fastest in two years. The hopes of a resurgent Asian market are also adding to the enthusiastic rise of the oil price.
Moreover, there is a meeting scheduled to happen this week between the Organization of the Petroleum Exporting Countries and its allies. The investors are expecting an increase in supply as a result of the meeting.
Stephen Innes, chief global markets strategist at Axi says that it is a must for more supply to come to the market, as there is bound to be an incremental demand for oil.