Oil Goes Gangbusters but May Face Short-Term Pressure

WikiFX News (26 Nov.) - WTI on Wednesday found some stability at $45.0 and climbed to an intraday high of $46.24, an eight-and-a-half-month high since Mar. 6. Nonetheless, pressures are potentially ahead of oil in the short term.

The recent positive news on vaccines spurs markets to bet on a recovery of the global economy within 2-3 years. As a result, oil prices rose to 6.8% on Wednesday.

In addition, Biden has formally begun the transition process, dispelling earlier concerns about post-election uncertainties. He has also nominated former Fed Chair Janet Yellen as Treasury Secretary, who will work with Jerome Powell, current Fed Chair, to accelerate economic recovery.

Crude oil traders are poised for OPEC+'s delay of three to six months to the planned oil-output increase, which could be another force driving the recent surge in oil prices.

While the US and Europe have not yet reached their peak number of coronavirus cases, there remain obstacles in the economic recovery as US jobless claims increased to 778,000 in the week ended Nov. 21. Oil prices may be hampered in the short term but will continue to grow in the medium to long period.

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Chart: Trend of Oil Prices