-Brent rally loses legs late in the session
-The Abraham Accords have backfired
A rally in crude oil prices fizzled by Tuesday afternoon after U.S. Senate Majority Leader Mitch McConnell blocked debate over expanded payments to individual taxpayers. A smaller bill was already signed into law during the weekend, though the continued acrimony in Washington should be indicative of the Trump hangover that will linger over the economy during the first half of the year. That comes amid a dip on consumer spending and diminishing sentiment in some U.S. economic sectors. Elsewhere, we’re seeing the consequences of the Abraham Accords developing with a joint military drill from armed factions in the Gaza Strip.
Brent crude oil was flirting with $52 per barrel early in the Tuesday session, but was fading along with the prospects of a strengthened stimulus package in the United States. The global benchmark was up by just 0.4% as of 2:20 p.m. ET to trade at $51.11 per barrel.
Vermont Sen. Bernie Sanders threatened to filibuster a move in the Senate to over-ride a presidential veto of a defense spending bill until the chamber voted for a proposal to send $2,000 checks to individual taxpayers. Moderate Republicans crossed party lines on Monday to vote in favor of a House measure to increase direct payments, a departing wish from President Trump. McConnell blocked efforts by Democrats to push the legislation forward, however, suggesting instead that lawmakers work through the week on a broader package.
That’s a bruise to investor confidence given the Republican playbook has stayed largely the same during the lame-duck period. Democrats have a shot at taking control of the Senate in January when candidates compete in a Georgia runoff election, though Republicans need to hold only one of two seats to maintain their majority. That means many of President-elect Joe Biden’s first-day priorities could face backlash from the Republican leadership.
Headwinds could be blowing again as the premium from vaccine-related news fades. That’s compounded by the rampant level of infections seen in Great Britain. In the United States, the Federal Reserve Bank of Dallas confirmed the sentiment on the vaccine premium by noting that perceptions were somewhat bleak for businesses in the district. Respondents to questions from the Fed showed unease was settling in after some signs of hope emerged with vaccine rollouts in November.
“We continue to see the hotel, restaurant, convention and leisure activity areas hit the hardest and expect no recovery for them until 2022,” one respondent said. “Unemployment is still of great concern.”
Elsewhere, the United States suffered an embarrassing blow of sorts on Tuesday when the Reuters news service issued a special report highlighting how the United Arab Emirates helped Venezuela bust U.S. sanctions with oil shipments.
“The activity shows how the UAE, one of Washington’s closest allies in the Middle East, is a hub for companies helping Venezuela skirt American sanctions,” the report read.
The UAE was among the first to embrace with détente with Israel. That favor to the United States came with a gift from Washington in the form of the coveted F-35 stealth fighter, a considerable determent in a regional effort to contain Iran and other U.S. adversaries in the Middle East. We’ve noted at great length how the so-called Abraham Accords, or the Arab Pivot, does less to usher in regional stability and more to clearly demarcate the line between friend and foe. The tilt toward Israel has left the Palestinian cause, meanwhile, on the cutting room floor. In a hint of a possible future and in a rare show of such unity, Hamas and other armed factions held brief joint military exercises in Gaza, launching an arsenal of missiles into the Mediterranean Sea.
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