By Geoffrey Smith
Investing.com -- Crude oil prices rose on Wednesday against a backdrop of little market-moving news, with attention focused largely on the inauguration of Joe Biden as U.S. President.
According to various reports, Biden is expected to sign an executive order later on his first day in office blocking the development of the Keystone XL pipeline, an act seemingly aimed at sending a signal that the new administration will prioritize climate change and air quality issues over the development of domestic oil and gas. Other major policy actions expected of the administration in the near term include a re-commitment of the U.S. to the Paris Climate Accord, and the ending of attempts by President Donald Trump to overturn California's new standards on tailpipe emissions.
By 11:15 AM ET (1615 GMT), U.S. crude futures were up 0.9% at $53.45 a barrel, while Brent crude, the global marker, was up 0.9% at $56.41 a barrel. Both blends are testing 11-month highs on expectation that the aggressive stimulus spending urged by Janet Yellen in her confirmation hearing as Treasury Secretary on Tuesday will translate into more robust fuel demand.
U.S. gasoline futures were up 1.0% at $1.5535 a gallon.
Earlier, there had been some volatility caused by an Iraqi news agency report citing Oil Minister Ihsan Abdul Jabbar as saying that the country was close to an agreement with the OPEC+ bloc of producers on raising Iraq's oil exports, a move that would signify a loosening of the production discipline that has underpinned prices in recent weeks.
The agency subsequently withdrew its report.
“The oil minister did not make these comments and did not meet the newspaper’s reporter,” oil ministry spokesman Asim Jihad told Reuters. The original article has since been deleted, Reuters reported.
Biden's policy toward the Gulf, specifically as regards Iran, is one big policy unknown that could end up having a big impact on the global oil market, analysts at Wood Mackenzie wrote in a new report.
"Iran is an ‘elephant in the room’, capable of delivering 1 million b/d of oil exports within months – if sanctions were lifted," strategist Ann-Louise Hittle wrote. However, she added that she expects the issue "to be put on the back burner, at least until after Iran’s own presidential elections in June 2021."
Hittle, who has consistently predicted a big rebound in oil demand this year, said she expects global demand to be back at 99 million b/d by year-end, just 1 million b/d short of pre-Covid levels. She also expects Brent to be back at $60 a barrel by then.