Oil Futures Advance After Trump Signs Relief Legislation

Brian L Milne
By  Brian L. Milne , DTN Refined Fuels Editor

CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange moved higher in early trading Monday after U.S. President Donald Trump late Sunday reversed course and signed a COVID-19 relief bill tied to omnibus legislation averting a government shutdown at midnight after criticizing the legislation for wasteful spending and paltry payments to U.S. citizens.

The $892 billion COVID-19 relief bill, the fifth passed by Congress since the pandemic laid siege on the United States, passed both chambers of Congress with overwhelming majorities, yet it was unclear if Congress would be able to act on Trump's demand in cutting wasteful spending and increasing direct payments to citizens from $600 to $2,000 in time. The current legislative session ends Jan. 2, 2021, and without action by Congress, could have died through a pocket veto.

Trump's decision to sign the bill into law also follows the lapse of emergency unemployment benefits over the holiday weekend, while a moratorium on evictions would end Dec. 31 at midnight, while the $1.4 trillion omnibus legislation keeps the government funded through the third quarter.

In early trading, NYMEX February West Texas Intermediate futures were up about $0.50 at $48.75 per barrel (bbl), with ICE February Brent gaining a like amount to $51.80 bbl. February Brent expires Wednesday, with the March contract trading near parity with February delivery.

NYMEX January ULSD futures are up 1.4 cents at $1.5040 gallon ahead of expiration Thursday, with the February contract trading at near parity. NYMEX January RBOB futures were up 1.31 cents at $1.3920 gallon ahead of expiration later this week, with February delivery at a 0.60-cent contango.

Early gains in oil futures also follows the roll out of vaccinations for COVID-19 in the European Union, while nearly ten million doses have been distributed in the United States with nearly two million individuals receiving the first dose in the two-dose vaccination program. The Centers for Disease Control and Prevention shows as of Saturday morning, 9,547,925 doses of the vaccines have been distributed with 1,944,585 people receiving the initial dose of the vaccine.

John Hopkins University reports nearly 81 million global infections of the coronavirus with worldwide deaths from the disease at nearly 1.8 million.

The United States joined dozens of other countries in placing restrictions on travel with the United Kingdom following a new variant of the coronavirus that has spread quickly through Britain in December. The United States now requires travelers from the U.K. to show a negative COVID test within 72-hour period.

While spreading rapidly, the new strain doesn't appear to be more lethal, according to several reports. BioNTech CEO early last week believes the vaccine created in partnership with Pfizer can address the new variant but said studies would need to be conducted. If adjustments to the vaccine are needed, they would take about six weeks.

Ahead of Christmas, the U.K. and the European Union reached an agreement on the U.K.'s decision to leave the EU. The agreement boosted the British pound after London and Brussels averted the potential for a disruption of trade at the start of 2021.

Oil exports from Saudi Arabia to China increased 43% in November from month prior to 2.06 million barrels per day (bpd) (8.48 million tons), according to Arab News, and exported 77.98 million tons during the first 11 months of 2020, up 2.2% against the comparable year-ago period. The report indicates Russia exported 6.1 million tons of oil to China in November, Iraq exported 5.098 million tons, and the United States exported 3.61 million tons.

Brian L. Milne can be reached at brian.milne@dtn.com

Brian Milne