Oil prices rose on Tuesday on hopes that the United States will soon reach a deal on a $2 trillion coronavirus aid package that could blunt the economic impact of the outbreak and in turn support oil demand.
Brent crude oil futures for May delivery rose by 67 cents, or 2.5%, to trade at $27.70 per barrel, while West Texas Intermediate crude futures gained 52 cents to trade at $23.88 per barrel.
“Oil is clawing its way higher, mainly on the back of the weaker dollar that stemmed from the Fed’s unprecedented measures,” said Edward Moya, senior market analyst at broker OANDA.
“WTI crude volatility will remain high and traders should not be surprised if this rally eventually gets faded.”
The U.S. Federal Reserve on Monday rolled out an extraordinary array of programs to backstop an economy reeling from restrictions on commerce that scientists say are needed to slow the coronavirus pandemic.
While a $2 trillion coronavirus economic stimulus package remained stalled in the U.S. Senate on Monday as lawmakers haggled over its provisions, U.S. Treasury Secretary Steven Mnuchin voiced confidence that a deal would be reached soon.
The expected stimulus pushed the U.S. dollar lower as it will increase the cash supply. The dollar index, which measures the greenback against six major currencies, fell 0.5% on Tuesday.
A weaker greenback boosts dollar-denominated oil prices since buyers paying in other currencies will pay less for their crude.
To see the full article, click here.