Three factors that push the oil price up

 

strong Chinese economic data

The oil price that fell slightly on Wednesday morning, started recovery again by early evening from stronger than expected economic data from China.

In addition, the colossal stimulus package announced by the incoming US president, Joe Biden, struck a chord with the global markets as a whole with his unequivocal message – “There is no time to waste.”

Mr Biden unveiled $1.9 trillion package in order to support the struggling Americans as well as roll out the vaccines as soon as practicable in order to minimize its toll being taken on the ordinary Americans.

Not only is a daily death toll over 4000 a day, a humanitarian issue, but also is becoming a moral issue, as the world’s most powerful nation struggles to get a grip on it.

It’s clear that the cuts by the OPEC+ has a direct impact on the supply side of the evolving oil equation and if the price continues to surge to an extent that can damage the tentative economic recovery, Mr Biden may not be in a haste to ban fracking on federal lands.

There are already signs that some shale oil producers emerge from self-imposed production hibernation while dusting off tools and equipment that they left behind during the pandemic.

They see a perfect opportunity in the horizon; the OPEC+ will soon feel the pinch, if they tighten the taps excessively at a critical time for the whole world.

 

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