Crude oil futures rise on hopes of resumption in US stimulus talks

Singapore — Crude oil futures ticked higher during mid-morning trade in Asia Sept. 25 amid hopes that the US Congress will resume discussions over a new stimulus deal.

At 11.07 am Singapore time (0307 GMT), ICE Brent November crude futures were trading at $42.08/b, up 14 cents/b (0.33%) from the Sept. 24 settle, while the NYMEX November light sweet crude contract was at $40.48/b, up 17 cents/b (0.42%).

This uptick in oil prices continued the Sept. 24 uptrend, when the ICE Brent November contract and the WTI November contract rose 17 cents/b (0.41%) and 38 cents/b (0.95%) from the Sept. 23 settle to close at $41.94/b and $40.31/b, respectively.

Market analysts attributed the uptrend in oil futures to optimism that the US congress will restart talks over additional economic stimulus, which could hasten the pace of US economic recovery and boost an otherwise bleak demand outlook for oil.

"[Speaker of the House] Nancy Pelosi and [US Treasury Secrarty] Steve Mnuchin expressed some urgency over the need for a stimulus deal. After being suspended last week, the likelihood of the two sides restarting talks are high," ANZ analysts said in a Sept. 25 note.

The prospect of a new stimulus package will provide relief to the oil markets, which have been inundated by a cocktail of bearish factors, most significant of which is the resurgence of the coronavirus pandemic in Europe.

Stephen Innes, chief global markets strategist at AXI, said in a Sept. 25 note: "The stimulus news could not have come at a better time. Oil market demand has been getting clouded by [the] re-imposing [of] soft or rolling mobility restriction globally, causing panic in the pit that circuit breaker type lockdowns could happen."

Innes, however, noted supply concerns were brewing once again following speculation that there will be an increase in Iraqi oil next month, saying, "We could probably expect more supply beyond the [supply] already factored in [through the] Libyan production [increase]."