Oil hits one-year peak on US winter storm

NEW YORK – A United States snowstorm pushed oil prices to pre-pandemic levels yesterday as global stocks extended rallies on hopes for more US fiscal stimulus.

Silver prices sank by 9% to US$26.78 (RM108.31) an ounce, after spiking the previous day to an eight-year peak on social media-driven demand.

Stock indices fired up as investors got back in the saddle and snapped up bargain shares after last week’s global rout, which was fuelled in part by the social media campaign to buy heavily shorted stocks that traders believe has petered out.

There is “relief that, at least for the time being, that the raid on short sellers has been thwarted”, said Quincy Krosby, chief market strategist at Prudential Financial.

In New York, the Dow closed up 1.6%.

Oil powers higher

Meanwhile, oil prices surged on the back of upbeat market sentiment and a snowstorm that socked the north-eastern US.

US benchmark West Texas Intermediate oil soared to one-year high of around US$55.07 a barrel, while Brent North Sea crude hit US$57.77, a level last reached nearly a year ago.

“Oil prices powered higher... lifted in part by the positive sentiment returning to equity markets, but mostly because of frigid weather sweeping the US, pushing up the demand for heating,” said Oanda analyst Jeffrey Halley.

The rebound marked a stunning turnaround for the crude market, which briefly turned negative last year as the deadly Covid-19 outbreak shuttered economies worldwide and caused a supply glut that sent traders scrambling.

BP shares nonetheless tanked by 4.5% after the energy group said it suffered a net loss of US$20.3 billion last year due to the pandemic.

Exxon Mobil gained 1.6% after reporting both fourth-quarter and full-year losses but unveiling new cost-cutting efforts, a low-carbon business unit and a new board member.

On the US stimulus front, President Joe Biden’s spokesman affirmed on Monday that the White House plans to press for passage of its US$1.9 trillion recovery plan.

Republicans have balked at the amount, and Biden on Monday met with a group of 10 lawmakers, who have proposed a US$600 billion plan that includes smaller handouts to taxpayers and no provision for state and local governments, which Democrats are likely to reject. – AFP, February 3, 2021