Oil managed to close to the upside today, December 29, even though OPEC+ is set to add another 500,000 barrels a day to output starting in January.
U.S. benchmark West Texas Intermediate gained 0.76% to $47.98 a barrel. International benchmark Brent crude climbed 0.37% to $51.05 a barrel. Oil futures have climbed 6% in December.
Even though stocks as a whole pulled back on worries that Congress won’t increase the $600 checks in the bill President Donald Trump signed on Sunday to the $2,000 the President has demanded and the House of Representatives has passed, oil moved higher on the theory that stimulus of any size will increase U.S. demand for oil.
Frankly, I don’t see increased demand outweighing increased supply. Not only is OPEC+ scheduled to increase production in January, but Russia’s deputy prime minister has said the courtly would support another production increase in February. (OPEC+ will meet next week to decide on production levels for February.)
Meanwhile, economists surveyed by Bloomberg estimate that U.S. domestic crude inventories fell by 3.1 million barrels last week.