Oil prices recover as the uncertainty over the US election result subsides, but the market has challenges to face in weeks ahead.
Rystad Energy’s Head of Oil Markets, Bjornar Tonhaugen, has offered the following comment:
“Markets are enjoying a relief-rally this morning as the US returns to political normality, brushing away the uncertainty that its election brought last week. Last week was turbulent and the possibility of a prolonged political turmoil depressed markets, which struggled to interpret the consequences of a disputed election result. A sense of political certainty today is taken as positive for oil markets and is thus providing a short-term boost, allowing prices to recover levels before facing again the bigger beast, that of Covid-19 and its consequences. As the change of power in the US will take some time to happen and since the current administration shows bitterness towards the result, a US stimulus package will be challenging to agree upon on the sort-term.
Such a relief package would provide a much needed boost for markets and consequently oil demand, but it now seems a bit distant. The relief package was something markets have been hoping for, so any gains today are capped by it moving further away in time. After what felt like the longest week this year, markets are now preparing again to face a grim but more familiar reality.
Covid-19 infection counts are approaching the grim milestone of 50 million cases and 1.25 million fatalities, and every week new countries and regions reinstate lockdowns…
