Crude oil prices have continued to modestly tick higher in the past few days after the U.S. President Donald Trump signed a new stimulus bill.
Fundamental analysis: Expectations for a higher demand
Crude oil prices climbed on hopes that the fresh pandemic stimulus in the U.S. will drive fuel demand up and stimulate economic growth, making investors more willing to take risks.
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“Oil appears to be underpinned by the passing of the U.S. stimulus and government funding omnibus legislation,” said Jeffrey Halley, a market analyst at OANDA.
On Monday, the U.S. House of Representatives led by Democrats voted to respond to President Donald Trump’s demand for coronavirus $2,000 relief checks. The Republican members of the Senate are expected to vote next.
Global stocks ticked higher for a fourth consecutive session in hopes of further stimulus but concerns over the pandemic capped the gains quickly. After a new variant of coronavirus was discovered in Britain, the government decided to impose tougher restrictions, weighing on short-term demand and prices.
On the other hand, investors are waiting for the next OPEC+ meeting, scheduled for January 4. The organization is expected to increase oil output by 500,000 barrels per day (bpd) in January, with Russia going for another increase of the same amount in February.
“While much focus will remain on the demand side of the global oil balances this week and into the new year, the supply side of the equation will be garnering more attention next month after OPEC+ cranks up its production allowances,” said Jim Ritterbusch of Ritterbusch and Associates in Houston.
Technical analysis: Levels above $50 targeted
Crude oil prices are trading about 0.5% higher today to swing back into the positive territory. Last week, oil prices closed above 1.5% lower, which is still seen as a positive given that the price action traded over 5 % in the red at one point.
The price action is now trading around the 100-WMA at $48.21 with a weekly close above this level likely to provide a solid base for oil traders to push higher. Apparent targets are the $50.00 mark, followed by $50.50, and $51.50.
Oil prices are slowly moving higher on expectations of a new coronavirus relief in the United States, which is expected to boost fuel demand and prompt economic growth.