“In my opinion, the most likely event capable of moving the crude oil market to the next level would be the passing of a coronavirus stimulus package.”
The uptick in oil prices paralleled the uptick in the stock market. Both of these were largely the result of US Speaker Nancy Pelosi releasing a statement which outlined her hopes that a stimulus deal could be reached with the Whitehouse.
Another interesting thing to note is that the weaker the US dollar is, the more crude futures are helped as the US dollar moves inversely with oil prices.
Though despite these positive trends, the continued prevalence of the coronavirus pandemic is especially problematic. PVM analyst Tamas Varga noted that “The speed with which the virus is spreading is the main concern for both health officials and financial investors.”
States are continuing to see spikes in cases, some in the Midwest have experienced a 25% increase in positive COVID-19 cases. Moreover, the national daily case count has jumped from a 35,000 daily average two weeks ago to a 46,000 daily average this week. This proves that the virus is still intensely virulent and a serious threat.
Prior to this minor uptick, the oil market had been relatively stable for the past few months following the initial wave of the coronavirus. Now however, Russian Energy Minister Alexander Novak warns of the risks of a second wave of coronavirus cases: it would significantly hurt the oil market.
Another factor that could cause oil prices to plummet or grow unstable is the relationship between nations in oil rich regions. Recently, one of the most intense fights between Armenia and Azerbaijan erupted, the worst one since 2016. This threatens the stability of oil because these regions are responsible for the pipelines which carry oil to the global market. Therefore, while oil has done well as of late, it is important to remain cautious about its success.