Brent oil price rose during the week ending Dec. 25, with positive support as the UK finally struck a Brexit deal that will keep trade ties with the bloc, however, a new and more contagious strain of coronavirus limited further increases.
International benchmark Brent crude traded at $51.37 at 1500 GMT on Friday, posting a 1.06% increase from Monday when trade at 0659 GMT registered at $50.83 per barrel.
American benchmark West Texas Intermediate (WTI) traded at $48.30 at the same time on Friday relative to $48.39 a barrel on Monday.
Oil markets started the week on a downward trend after last week’s gains and euphoria when Brent reached record highs not seen since March. The main reason was a new Covid-19 strain found to be rampant in London, which was said to be up to 70% more transmissible than the original.
More than 40 countries suspended travel from the UK and even started to close their borders with the country to prevent the spread of the new virus. Three airlines in the US have agreed to require a negative coronavirus test result from passengers boarding flights from the UK to New York.
Oil prices gained support from the positive US relief package developments for the general public and hard-hit businesses amid the economic slowdown caused by the pandemic.
Although the US energy markets closed early on Thursday for the Christmas holidays, investors are hopeful that the much-anticipated $900 billion COVID-19 relief bill will be passed in the US Congress on Monday.
Trump has to sign the deal into law, but before doing so, he suggested some changes, specifically to increase the “ridiculously low” $600 stimulus checks to $2,000.
Another factor driving the upward oil price trend was a fall in US crude oil inventories last week.
Signaling a rebound in crude demand in the US, the world's largest oil consumer, commercial crude oil inventories in the US dropped by 600,000 barrels relative to the market expectation of a 3.2 million-barrel draw. A surprise drop in gasoline stocks was also seen with a fall of 1.1 million barrels to 237.8 million barrels.
Another positive signal about the rebounding economy from the coronavirus pandemic was the decline in the US first-time claims for unemployment benefits.
Last week the first-time jobless claims fell by 89,000 from last week to 803,000, marking its lowest level in three weeks.
In addition to the US relief package, investors are also closely watching the developments over Brexit.
The UK and the European Union agreed on a deal on Thursday to allow the country to formally leave the EU by the end of this year.
By Sibel Morrow