Picture: REUTERS
Picture: REUTERS

London — Oil prices rose more than $1 on Monday, supported by optimism over Covid-19 vaccinations, a US stimulus package and growing factory activity in Europe despite restrictions imposed to curb the coronavirus.

Brent crude was up $1.08 or 1.7% to $65.50 per barrel by 9.59am GMT, and US West Texas Intermediate (WTI) crude jumped $1.04 or 1.7% to $62.54 a barrel.

Both contracts finished February 18% higher.

“The three major supportive factors are the prevalent vaccine rollouts, the optimism about economic growth and the view that the oil balance will get tighter as a result of the first two points,” PVM Oil Associates analyst Tamas Varga said.

Also supporting oil was a $1.9-trillion coronavirus relief package passed by the US House of Representatives on Saturday.

If approved by the Senate, the stimulus package would pay for vaccines and medical supplies and send a new round of emergency financial aid to households and small businesses, which will have a direct effect on energy demand.

The approval of Johnson & Johnson’s Covid-19 shot also buoyed the economic outlook.

Manufacturing data from around the world was mixed.

China’s factory activity growth slipped to a nine-month low in February, but German activity hit its highest level in more than three years, brightening the outlook for Europe's largest economy.

Eurozone factory activity raced along in February thanks to soaring demand.

Opec+, will meet on Thursday and could discuss allowing as much as 1.5-million barrels per day of crude back into the market.

ING analysts said Opec+ will need to be careful to avoid surprising traders by releasing too much supply back into the market.

“There is a large amount of speculative money in oil at the moment, so they will want to avoid any action that will see (those investors) running for the exit,” the analysts said.

Separately, Iran on Sunday dismissed the idea of opening talks with the US and the EU to revive the 2015 nuclear deal, insisting Washington must first lift unilateral sanctions that have sharply reduced Iran's oil exports.

Reuters

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