SINGAPORE (Reuters) – Oil prices gained more than 2% on Monday, with Brent futures rising above $40 a barrel, after Joe Biden clinched the U.S. presidency and buoyed risk appetite, offsetting worries about impact on fuel demand from the worsening coronavirus pandemic.
Brent crude futures LCOc1 for January climbed 82 cents, or 2.1%, to $40.27 a barrel by 0101 GMT, while U.S. West Texas Intermediate crude CLc1 for December was at $37.98 a barrel, up 84 cents, or 2.3%.
Prices recovered from a 4% decline on Friday, rising along with other financial markets after Biden emerged as the winner in the U.S. presidential race on Sunday.
“Trading this morning has a risk-on flavour, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney. “The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”
McCarthy added that investors’ focus is likely to turn to the renewed coronavirus outbreaks now that the U.S. election is out of the way.
U.S. President-elect Biden and his team are working on tackling the worsening health crisis. The United States became the first nation worldwide since the pandemic began to surpass 10 million COVID-19 infections, according to a Reuters tally on Sunday.
Separately, U.S. oil production is set to climb as producers are tapping into a backlog of drilled wells left uncompleted (DUCs) to boost output. The number of operating oil and gas rigs in the United States rose for an eighth week last week, according to Baker Hughes.
Reporting by Florence Tan. Editing by Gerry Doyle