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Futures Movers: U.S. infrastructure bill ‘screams bullish for oil’ as crude futures rise

Oil futures rose Monday, bouncing back from last week’s losses, as investors cheered passage of a $1 trillion U.S. infrastructure spending package and Saudi Arabia lifted prices for crude exports.

West Texas Intermediate crude for December delivery
CL00,
+0.62%

CLZ21,
+0.62%

rose 91 cents, or 1.1%, to $82.18 a barrel on the New York Mercantile Exchange. The U.S. benchmark pulled back 2.8% last week. January Brent crude
BRN00,
+0.62%

BRNF22,
+0.62%
,
the global benchmark, gained 80 cents, or 1%, to trade at $83.54 a barrel on ICE Futures Europe after falling 1.2% last week.

“When the market saw oil prices fall after last week’s OPEC+ meeting most observers knew this was an exaggerated reaction and the expectation was that prices would quickly jump back as there was no surprise to justify the drop,” said Louise Dickson, senior oil markets analyst at Rystad, in a note.

Global oil-market conditions became more bullish following last week’s OPEC+ meeting, which saw the producers defy pressure to increase the size of planned production increases, she said. And the $1 trillion infrastructure bill passed by Congress late Friday will undoubtedly boost growth in oil demand, the analyst said.

“This U.S. infrastructure bill screams bullish for oil,” Dickson wrote.

Meanwhile, a decision by Saudi state-run oil company Saudi Aramco to boost crude prices on exports added to the bullish tone, analysts said.

Aramco late Friday more than doubled the premium that Asian consumers would pay beginning in December next month for its flagship Arab Light crude to $2.70 a barrel more than the average of Platts Dubai and DME Oman prices. Aramco also raised prices for its sales of light crude to the U.S. to $1.75 a barrel above the Argus Sour Crude Index, which reflects the U.S. Gulf Coast medium-sour crude, and cut discounts it offers Northern European and Mediterranean consumers to $0.30 a barrel less than ICE Brent prices.

Read more: Saudi Aramco raises official selling prices amid tightness

“The price increments are much higher than market expectations and give a bullish signal on supply tightness,” said Warren Patterson, head of commodities strategy at ING, in a note. “OPEC’s steady approach on the output increments at 400,000 barrels a day per month and stronger oil demand in global markets appears to have contributed to the increase in prices.”

Oil traders also assessed the latest data on China’s crude oil imports, which slumped below the 9 million barrel-per-day mark to a 39-month low of 8.94 million barrels per day in in October, according to a report from S&P Global Platts Monday, citing data from the General Administration of Customs. The decline came as both state-owned and private refiners slowed down buying in the face of high oil prices, the report said.

At the same time, analysts are watching for clues as to whether the Biden administration, whose pleas for OPEC+ to accelerate production increases were ignored last week, will tap the U.S. Strategic Petroleum Reserve. Analysts said a decision on such a move would likely come after the Tuesday release of the Energy Information Administration’s latest Short-Term Energy Outlook.

In other Nymex energy trading, December gasoline
RBZ21,
+0.08%

tacked on 0.4% to $2.329 a gallon and December heating oil
HOZ21,
+0.41%

added 0.7% to $2.472 a gallon.

Natural-gas futures edged lower, with the December contract
NGZ21,
-0.44%

down 0.1% to $5.511 per million British thermal units.

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