The Daily Dose; Better than expected?

The Daily Dose; Better than expected?

-OPEC is upbeat

-So is Jerome Powell

Crude oil prices continued to move higher in Thursday trading after broad-based sentiment that the global economy, along with the strains from the pandemic, is turning the corner. Economists at OPEC kept their forecast for global growth unchanged, but saw prospects of more stimulus coming from the United States as encouraging.

Crude oil prices moved lower early in the session, but recovered as positive economic news made its way through the headlines. The price for Brent crude oil was up 0.62% as of 2:30 p.m. ET to trade at $56.41 per barrel.

Third quarter 2020 was better than expected, OPEC economists said in the monthly report for January, though the group kept its forecast for growth in global gross domestic product at 4.4%. Recent news of increased stimulus in the United States from President-elect Joe Biden and recovery in the Asian economies, however, “provide potential upsides for this year’s growth prospects.”

US GDP for the year is expected to increase by 3.4%, the Eurozone grows by 3.7% and China’s economy expands by 6.9%. China already boasted of slight improvements in its manufacturing sector, despite the economic pressure from the United States, and Xiao Yaqing, the Chinese minister of industry and information technology said the “opportunities outweigh the challenges” this year.

Asian growth is supportive for higher crude oil prices given their growing demand from crude oil and refined products. OPEC economists expect demand outside the OECD will increase by 3.3 million barrels per day from last year, driven in large part by China and other advanced Asian economies.

The tone was similar for the United States, which saw a double-digit contraction in 2020. Brian Deese, tapped with heading the National Economic Council under President Biden, told Reuters that the new administration will introduce a “rescue bucket” for the US economic that includes another round of $2,000 payments to individual taxpayers. Fed Chair Jerome Powell, meanwhile, said the situation, at least on the employment front, looked better than expected.

“We were in a good place in February of 2020, and we think we can get back there, I would say, much sooner than we had feared,” he said.

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