Oil prices slide as traders focus on U.S. fiscal package in Christmas Eve trade

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Oil prices slide as traders focus on U.S. fiscal package in Christmas Eve trade


Crude-oil futures headed lower on Thursday as light-trading volumes in the last trading session before Christmas left prices vulnerable to pullbacks amid concerns about whether a U.S. fiscal package will be signed into law by President Trump.

Commodity investors have fretted that a resurgence in the COVID-19 pandemic in the U.S. and Europe in particular will hurt demand for energy without sufficient aid from the government to stem the economic harm from restrictions on consumer and business activity.

Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch Thursday morning that the U.S. inventory reports for crude weren’t unabashedly bullish but that investors shouldn’t put too much emphasis on the market’s moves in a holiday-abbreviated session.

Trading in U.S. energy markets are slated to close an hour earlier on Christmas Eve, at 1:30 p.m. Eastern, and remain closed on Friday.

“Yesterday inventory numbers weren’t particularly bullish…but I wouldn’t put too much into today’s trading moves,” Zahir said.

“We do need to get some kind of stimulus or if the government gets shutdown we could see losses” accelerate, he added, reference the coronavirus aid package that is rolled into the funding bill for U.S. government that was passed by Congress on Monday but is being held up by President Trump.

West Texas Intermediate crude for February delivery
CLG21,
-0.81%

CL.1,
-0.81%

was trading 43 cents, or 0.9%, lower at $47.70 a barrel, after notching a 2.3% gain on Wednesday.

February Brent crude
BRN00,
-0.78%

 
BRNG21,
-0.80%

was down 46 cents to reach $50.80 a barrel, a decline of 0.9%, after the contract rose 2.2% Wednesday on ICE Futures Europe.

For the week, WTI is on pace for a weekly slump of 3.2%, while Brent is on track for a weekly decline of 2.8%, FactSet data show, based on the most-active contracts. Both contracts would mark their first weekly decline in two months.

President Donald Trump has raised the possibility of a veto of a long-sought-after fiscal spending package, after he vetoed a $740.5 billion defense-policy bill on Wednesday and demanded last-minute changes to coronavirus-relief legislation. The president is asking for the increase of direct payments to individuals to $2,000 from $600 and Democrats were set to vote on such an amendment later Thursday, but it is unclear if Republicans will also endorse such a change.

On Wednesday, oil markets took a slightly more bullish turn after the Energy Information Administration reported a fall of 562,000 barrels in U.S. crude inventories for the week ended Dec. 18, contrasting with an earlier report from the less closely followed American Petroleum Institute late Tuesday that showed that U.S. crude supplies rose by 2.7 million barrels for the week.

Still, the decline in inventories was less than the average of 4.7 million barrels forecast by analysts polled by S&P Global Platts.

Meanwhile, Baker Hughes on Wednesday, reporting two days early because of the Christmas holiday, showed that the number of active U.S. rigs drilling for oil rose by 1 to 264 this week, marking a fifth straight weekly rise in oil-rig counts. The total active U.S. rig count, which includes those drilling for natural gas, was also up by 2 to 348.

On Wednesday, optimism around a nearing Brexit deal also added some fuel to the crude uptrend, but a deal between Britain and the European Union to avoid the U.K. leaving the trade bloc without an agreement hasn’t yet been completed.



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