Oil prices have edged-up by 2% following the announcement that Joe Biden won the US presidential race.
Biden’s victory had offset concerns about the impact on fuel demand as a result of the novel coronavirus (Covid-19) pandemic.
Brent crude futures for January rose by $0.94 to reach $40.39 a barrel, while US West Texas Intermediate (WTI) futures for December increased $0.93 standing at $38.07, Reuters reported.
Meanwhile, the commodities prices have been boosted as the American dollar weakened.
As the dollar weakens, commodities become available for cheaper prices to investors holding currencies of other nations.
CMC Markets Sydney chief market strategist Michael McCarthy was quoted by the news agency as stating: “Trading this morning has a risk-on flavour, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate.
“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”
Currently, US President-elect Joe Biden and his team are working towards managing the ‘worsening’ health crisis.
According to a Reuters tally on 8 November, the US became the first country to surpass ten million Covid infections since the pandemic began.
OCBC economist Howie Lee said: “There will be some repercussions further down the road. Either you’re crimping energy demand or consumption behaviour.”
American energy services firm Baker Hughes has reported a rise in the number of US operating oil and gas rigs for a straight eighth week.
The Organization of the Petroleum Exporting Countries, and allies including Russia, together known as OPEC+, is currently cutting production by about 7.7Mbpd to support prices.
The group intends to ramp up output by 2Mbpd from January.
Meanwhile, China, the world’s top crude importer, posted a 12% decline in last month’s imports compared to September data.
However, analysts expect imports to increase next year after Beijing hiked quotas by 20%.