The international benchmark oil price Brent hit a four-month high on Tuesday thanks to signs of economic recovery from the COVID-19 pandemic, which also drove other commodity prices. The price change also followed the agreement by EU leaders on a massive stimulus package to relieve the bloc from the current economic downturn. The price also received support from promising results of early tests of a virus vaccine developed by AstraZeneca and Oxford University.
Brent for September settlement was traded at around $44/barrel, the highest since March 6, when OPEC+ pact fell apart and sparked a short-lived price war. OPEC+ has since resolved the issues and is now implementing coordinated supply curbs to support the price. Meanwhile, US WTI for September delivery traded at $41.55/barrel at 4:50 p.m. in New York.
The increase in oil prices drove the S&P 500 Energy Sector Index to hike by more than 6% on Tuesday. Occidental saw its shares rise by the most of 15%, followed by Devon Energy (13%), Apache Corp (12%), Halliburton (11%), Chevron (7%), and ExxonMobil (6%).
Despite yesterday’s increase, oil prices are expected to still face headwinds through the end of the year as demand remains weak, and the pandemic is not over. China, which has been the bright spot for the oil market, is now facing a severe flooding season that threatens the country’s economic activity and oil demand.
