Oil held gains after capping a fifth straight weekly advance on an OPEC+ production deal and hopes for another round of U.S. stimulus that could provide an immediate demand boost before vaccines are widely rolled out.
Futures in New York traded near $46 a barrel after rising 1.6% last week to close at a nine-month high on Friday. The Organization of Petroleum Exporting Countries and its allies came to a compromise agreement under which they will add oil 500,000 barrels a day of output from January and then hold monthly meetings to decide on subsequent moves.
U.S. House Speaker Nancy Pelosi said there’s momentum building toward a compromise fiscal stimulus plan, although Republicans complained about the scale of aid to states included in the bipartisan proposal that’s become the best chance yet for a deal.
Oil surged around 27% last month on optimism that energy demand wold recover quickly next year as Covid-19 vaccines are rolled out. The oil futures curve is signaling tighter supply as demand in Asia booms and the key North Sea market strengthens.