(Bloomberg) -- Oil extended gains in Asia on growing optimism for more U.S. fiscal stimulus to help lift the world’s largest economy out of recession.
Futures in New York were up 0.5%, after surging 5.9% on Monday to post the biggest daily gain since May. President Donald Trump said in a tweet that he would leave hospital on Monday evening, easing concerns over his health. His diagnosis with Covid-19 has been viewed by markets as boosting the prospects both for fiscal stimulus and an easier election win by his Democratic opponent Joe Biden.
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin engaged in another round of talks Monday on a pandemic relief package, with no sign they are close to deal, despite Trump’s urging to get it done. They’re attempting to bridge a still-yawning gap between the Democratic $2.2 trillion proposal and a $1.6 trillion White House offer.
Crude prices are still recovering from a selloff in recent weeks amid concerns that a resurgence of the pandemic in major economies may derail the fragile recovery in oil demand. Reopening plans across the world are being thrown into question, with Governor Andrew Cuomo saying New York City public and private schools in viral hot spots must close Tuesday and Ireland debating a return to full lockdown.
Meanwhile, U.S. output is expected to remain muted as the industry struggles with layoffs and bankruptcies. Almost three-quarters of the pandemic-driven jobs losses in the U.S. petroleum and chemical sectors may not come back before the end of next year, according to Deloitte LLP.
On the output front, a strike in Norway will cut about 330,000 barrels a day of oil and gas production, about a third of which is oil, lending some immediate support to oil markets. In contrast, Libya’s oil output has risen to 295,000 barrels following a truce in the OPEC nation’s civil war and the lifting of a blockade on energy facilities.
Total SE Chief Executive Officer Patrick Pouyanne said fuel consumption in Europe is almost back at last year’s level. In the U.S., gasoline demand rose 3.2% in the seven days ending Saturday from a week earlier, reversing three consecutive weeks of declines, according to GasBuddy.
Focus is also shifting to storms in the U.S. Tropical Storm Delta is forecast to become a hurricane in the Gulf of Mexico later this week. Its winds could reach 105 miles (169 kilometers) per hour as it crosses the Gulf, making it a Category 2 storm on the five-step Saffir-Simpson scale, the U.S. National Hurricane Center said Monday.
Saudi Arabia’s Finance Ministry is budgeting for oil prices to be around $50 a barrel for the next three years, according to a Goldman Sachs Group Inc (NYSE:GS). analysis of the kingdom’s fiscal plans.
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