Oil up over hopes of $1 trillion US aid package

Oil was up on Tuesday morning in Asia, backed by hopes that the US will pass another stimulus bill which put pressure on the dollar and supported equities.

Brent oil futures rose 0.30% to $44.14 by 9:50 PM ET (2:50 AM GMT) and  WTI Futures also rose 0.24% to $41.70, rebounding from losses on Monday.

In the US, Senate Republicans proposed a $1 trillion Covid-19 aid package that would include $1,200 payments to Americans, as well as incentives for the manufacture of personal protective equipment in the United States, rather than China. The package also includes $190 billion in for small businesses and $100 billion in loans to businesses that operate seasonally or in low-income areas.

The proposed package cheered investors and helped weaken the dollar, which boosted both stock and oil prices.

However, oversupply remains an issue for investors who will be looking closely at figures from the American Petroleum Institute (API) that will be released later in the day.

“The expanding contango curve in WTI and Brent is a function of oversupply,” Bob Yawger, director of the futures division at Mizuho Securities USA warned in a note. “Crude oil has traded above $40 every day this month and it appears that US producers are prepared to take the bait and increase production.”

A contango curve is one in which forward prices are higher than spot prices.

By Investing.com:https://www.investing.com/news/commodities-news/oil-up-over-hopes-of-1-trillion-us-aid-package-2242826