Oil prices rose early on Monday, with WTI Crude topping $60 a barrel for the first time in a week after the Fed chair Jerome Powell said that the outlook on the U.S. economy had "brightened substantially."
As of 9:32 a.m. EDT on Monday, WTI Crude prices were rising by 1.97 percent at $60.50, and Brent Crude was up 1.76 percent at $64.06.
Oil prices were supported by Powell's assessment that the U.S. economy is set for strong growth and job creation with vaccination rollouts and fiscal stimulus. A weaker U.S. dollar also added to investors' appetite for crude, while another claim from the Yemeni rebel group the Houthis that they had targeted oil facilities of Aramco in Saudi Arabia further supported prices.
In an interview with CBS '60 Minutes' published on Sunday, Fed's chair Powell said that "What we're seeing now is really an economy that seems to be at an inflection point. And that's because of widespread vaccination and strong fiscal support, strong monetary policy support. We feel like we're at a place where the economy's about to start growing much more quickly and job creation coming in much more quickly."
The key risk to the economy is a potential resurgence of the coronavirus, Powell warned, noting that social distancing and masks would be a "smart" thing to do as states are re-opening and easing restrictions.
"I'd say that we and a lot of private sector forecasters see strong growth and strong job creation starting right now. So really, the outlook has brightened substantially," Powell added.
The brighter prospects for the U.S. economy outweighed at the start of the trading week concerns over oil demand in other parts of the world, with COVID cases surging in India, the world's third-largest oil importer.
Oil prices remain "rangebound with the prospect for stronger economic growth helping to offset the impact of a resurgent coronavirus just as OPEC+ prepares to add supply," Saxo Bank analysts said on Monday.
"Last week oil posted its worst week in three and while the demand outlook into the second half looks strong, short-term challenges are likely to keep Brent rangebound, currently between $60 and $65," the analysts noted.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More