Oil Traders Weigh America’s Future Relationship with Key Oil PlayersOil prices remained firm at the last trading session under Donald Trump Presidency.
With the Biden inauguration scheduled to hold at the U.S capitol today, oil traders are a tad concerned about what foreign policy stand his presidency will take has regard to U.S future relationship with key oil producers that include Iran, Saudi Arabia, and Russia.
One of the wild cards some energy experts are envisaging is an upside to Iranian current oil production level dependent on the potential lifting of America’s sanctions under the incoming U.S president.
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Such action however could affect crude oil demand/supply rebalancing negatively taking into consideration that the global economy hasn’t yet recovered amid rising COVID-19 cases globally thereby making a strong case on crude oil prices plunging below $50/Barrel once again.
Oil bulls are taking control of the prevailing oil price action on the account that open interest in the black liquid hydrocarbon is on the rise, as leading hedge funds momentarily in large numbers consider investing into the commodity asset class. This is because many oil traders consider the black fossil as a hedge against inflationary pressures.
In buttressing the bullish bias in play recent data reveal there has been an upsurge in the number of Oil bulls in the past week. About 163 money managers placed bullish bets on Brent Crude and West Texas Intermediate in the previous week showing the highest uptick demand by such fund managers in 11 months.
Brent crude the global benchmark for crude is expected to reach $60 in Q1, 2021 amid unprecedented stimulus programs expected to be unveiled by the incoming Joe Biden Presidency.
Also, Oil prices are being supported by the falling value in the greenback on the fact that the weaker U.S dollar lends support to crude oil prices since it’s denominated in U.S dollars.
The U.S dollar is expected to remain under pressure, at least in Q1, 2021 as it would be in the interest of the U.S. economy to keep the dollar lower in order for U.S leading companies to remain competitive coupled with spurring local consumption at the world’s largest economy. Such macro would aid crude oil prices in the mid-term.