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Brent Crude Lifted on Biden Victory

November 10, 2020

Oil prices climbed more than 2% today, with Brent futures edging above $40 a barrel, after Democrat Joe Biden secured the U.S. presidency and buoyed sentiment and risk appetite, quashing worries about the impact on demand from a worsening coronavirus pandemic.

Brent crude futures for January climbed $1.06, or 2.7%, to $40.51 a barrel , and U.S. West Texas Intermediate crude for December was at $38.21 a barrel, up $1.07, or 2.9%.

Oil fought back from a 4% decline on Friday, gaining with other financial markets after Biden emerged as the winner in the U.S. presidential race on Sunday. Meanwhile, the USD weakened, giving a boost to commodities priced in the Dollar as they became more affordable for investors holding other currencies.

Joe Biden and his team are working on tackling the worsening health crisis. The United States became the first nation worldwide since the pandemic began to surpass 10 million COVID-19 infections.

Separately, U.S. oil production is oncourse to climb as producers are tapping into a backlog of drilled wells left uncompleted to boost output. The number of operating oil and gas rigs in the United States rose for an eighth week last week.

Key members of the Organization of the Petroleum Exporting Countries (OPEC) are wary of Biden relaxing measures on either Iran or Venezuela in years to come, which could mean an increase in production that would make it harder to balance supply with demand.
It has been widely speculated that the return of Iranian oil supply is more likely to happen at end-2021 or in 2022, while OPEC and its allies are cutting output by approximately 7.7 million barrels per day to balance global oil markets.

China, the world’s top crude importer, recorded a 12% decline in October imports compared with September, many analysts, myself included, expect imports to rise into 2021 after Beijing increased quotas by 20%.

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