March started surprisingly! Oil hit 13-months high price and Brent did a 35% rally since January. On Friday, Saudi Arabia agreed to continue the 1-million-barrel lower oil production for another month. OPEC+ declared they are going to increase the supply only for 150,000 barrels this month instead of 500,000 barrels.
Formerly, Goldman Sachs had predicted $75 for oil in 2021. Getting to summer, we can expect the demand increases and oil be able to reach the anticipated price. Asian demand is relatively strong, although china has slowed down recently. Other commodities such as copper also hit their all-time high price while Europe and America demand is still in the chain of the pandemic. With vaccinations getting faster, European countries will probably be out of COVID-19 restrictions in summer and end the travel bans. When travelling fear decreases, we will see more people travelling, and the demand for fuels, including gasoline, diesel and jet fuel will boost more. Moreover, demand is usually higher in summers, and we can expect better prices.
US dollar was a strong driver in the market last week. As Infinity galaxy stated in the last weekly oil report, as long as US bonds 10 years’ yield are growing we will have a stronger dollar. Indeed, the US dollar Index rose about 1.5% during the week. Financial reports such as the unemployment rate also show that the economies are recovering in countries, and authorities have not stated any difficulties.
At the end of the week, the $1.9 trillion rescue package was finally approved. Bigger stimulus checks in households can lead to another wave of demand for stocks. We should wait to see how the market starts the new week with more money in the American households’ pockets. It may drive the stocks and other commodities higher, which we find out through the second week of March.
Considering the new stimulus package, we can say the week will be a little more promising for stocks and commodities. The dollar can also see lower prices for some days. Oil price is already at a strong level, and it tends to touch higher prices. The oil market will have better prices unless Brent can stabilize under $63 and the producers put an end to the tight supply.