Oil is poised for a seventh weekly advance as U.S. lawmakers work toward finalizing a stimulus package that may boost near-term demand ahead of a broad roll-out of the Covid-19 vaccine.
Futures in New York traded near $48 a barrel, set for the longest run of weekly gains since April. Congressional leaders are working through the final sticking points of the coronavirus relief deal that’s worth almost $900 billion. The U.S. started delivering the first doses of a vaccine across the country this week.
Oil is trading near the highest level in almost 10 months amid optimism for a sustained recovery in fuel consumption following vaccine breakthroughs. The market, however, is still facing a number of near-term hurdles, including a resurgent virus in some regions and more supply from OPEC+ next month.
The physical market is seeing strength, with prices for Russian, Middle Eastern and U.S. barrels rising due to strong buying from Asia. While Indian refineries are running at full tilt, there are some signs of weakening demand in the region including from South Korea as the virus stages a comeback.
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The mixed outlook has led to a weakening of the front end of Brent’s forward curve, which has flipped back into a bearish structure. The prompt timespread was 6 cents a barrel in contango on Thursday, where near-dated contracts are cheaper than later dated ones