Oil reached its highest close in almost 10 months as U.S. lawmakers worked toward finalizing a stimulus deal that may boost near-term demand ahead of a broad roll-out of the Covid-19 vaccine.
Futures in New York were near $48.50, headed for a seventh weekly gain, Bloomberg reports.
Saudi Arabia’s crude oil exports rose to 6.159 million barrels per day (bpd) in October, up by nearly 100,000 bpd from the 6.066 million bpd exports in September, according to data from the Joint Organizations Data Initiative (JODI). In June, Saudi Arabia saw its crude oil exports drop to their lowest on record at just below 5 million, after the Kingdom lead the OPEC+ group of producing nations with deep cuts to prop up oil prices during the summer.
Lower oil prices forced Saudi Arabia to cut spending for its announced 2021 budget, scaling back spending at a time when the Kingdom’s economy, like others globally, struggle to cope with the fallout from the Coronavirus pandemic. The kingdom stated in its budget that it would cut spending by 7.3% next year to 990 billion riyals ($264 billion). Revenue is forecast to be 849 billion riyals. That would lower the fiscal deficit to 4.9% of gross domestic product from 12% in 2020.
The steady rise in oil’s price is good news for the Kingdom as it continues to work toward a more diversified economy but is still reliant on oil to fund its diversification push.
Oil reached above $50 on the Brent index this week.
As Bloomberg notes, Oil is the “vaccine trade” at the moment, according to Goldman Sachs Group Inc., and prices have gained further support as the U.S. works through the final points of a stimulus package worth almost $900 billion.
One reason why prices are climbing is demand from China and India, OilPrice.com notes, citing a Bloomberg report this week that Chinese and Indian refineries are buying more crude oil than last month, pushing prices up, in some cases by as much as $3.50 per barrel over the benchmarks. The spot market has also seen a revival thanks to the appetite of Asian refiners, the report noted.
Oil’s climb this week, capping a 7-week long run, was helped by an attack on a Saudi oil tanker by an explosive-laden boat in the port of Jeddah on Monday, pushing the price of Brent crude futures above $50.
