Following the biggest daily slide in three weeks on Wednesday, oil prices rose by more than 2 percent on Thursday morning after House Speaker Nancy Pelosi instilled hope in the markets that a deal on a new U.S. stimulus package could be imminent.
Oil prices were only slightly up in earlier trade, but extended gains after Speaker Pelosi said that talks with Treasury Secretary Steven Mnuchin continue and a deal could be imminent.
Secretary Mnuchin “and I continue our conversation. We’re about pretty soon ready to put pen to paper,” Speaker Pelosi told MSNBC about a coronavirus relief deal.
Additional support to the markets came from the U.S. Department of Labor, which said on Thursday that new weekly jobless claims in the U.S. were 787,000 for the week ending October 17. The figure was lower than analysts had expected—the median economist estimate compiled by Bloomberg was of 870,000 unemployment benefit claims.
Despite the still persistent concern about the stalled global oil demand recovery amid surging COVID-19 cases in major economies, including in Europe and the U.S., oil prices rebounded from Wednesday’s losses on the hopes of a new stimulus package and the better-than-expected job figures.
Prices had slipped on Wednesday by over 3 percent, with WTI Crude dipping below $40 a barrel after the EIA reported the biggest build in U.S. gasoline inventories since June. Despite the fact that the EIA reported a small crude inventory draw, market participants focused on the rise in gasoline stocks, which increased by 1.9 million barrels for the week to October 16.
Gasoline production last week averaged 8.9 million bpd, compared with 9.2 million bpd a week earlier. The lower gasoline production and the jump in gasoline inventories point to falling gasoline demand in the U.S. this month, which weighed on prices on Wednesday.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com: