Oil soars to highest since March as investors boost optimism for economic recovery

Reuters

Oil futures leaped to their highest level since early March on Tuesday as the European Union’s new stimulus deal lifted hopes for economic recovery.

West Texas Intermediate crude contracts jumped as much as 3.3%, to $US42.16 per barrel. Brent crude, oil’s international standard, rallied 3.4% to $US44.75 at intraday highs.

The commodity market’s gains arrive after EU leaders came to an agreement on a 750 billion euro ($US858 billion) stimulus package early Tuesday morning. The measure aims to lift the coalition from coronavirus-fuelled economic downturns through low-interest loans and grants. The deal’s approval boosted European stocks.

“Before the pandemic, many investors doubted the EU would ever come near to forming a fiscal union, this deal was a step closer to that and alleviates any short-term concerns that another Brexit would happen,” Edward Moya, senior market analyst at OANDA, said in a note.


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Investors are also hoping a slowdown in US virus case growth signals a peak for the virus’ recent resurgence. California, Georgia, and North Carolina all reported a decrease in the pace of new COVID-19 cases on Monday. Containing the US’s latest outbreaks would likely renew travel activity sooner and bolster oil demand.

The latest updates from coronavirus vaccine trials gave oil bulls even more to cheer for. AstraZeneca and Oxford University announced Monday morning their vaccine increased levels of coronavirus-targeting antibodies and T cells in patients. Separately, UK biotech firm Synairgen revealed its experimental drug dramatically lowered the odds of COVID-19 patients needing a ventilator or dying compared to those taking a placebo.

WTI crude traded at $US41.92 per barrel as of 8:40 a.m. ET Tuesday. Brent crude traded at $US44.49.


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