Oil Gains After Biden’s Bipartisan Infrastructure Framework Passes the House
Oil stocks rose Monday morning in the first hours of trading after Congress passed President Joe Biden’s $1 trillion infrastructure bill late Friday afternoon.
As GOBankingRates reported earlier, Brent crude was up 1.7% to $83.98 a barrel after opening at $82.55. U.S. oil gained $1.11, pushing the price up to $82.45 a barrel from the morning start of $81.34.
Saudi Arabia’s state-owned oil producer Aramco also raised the official selling price for its crude oil.
Infrastructure spending is expected to increase energy demand since it includes money allocated for the betterment of the nation’s roadways, railways and ports, all of which could see increased traffic which will require an increase in oil for their operation.
The economic boost expected from the bipartisan deal comes from the $312 billion allocated for transportation renewal projects, all of which are said to increase the number of jobs and construction crews necessary to complete the jobs.
Additionally, $109 billion is allocated to roads, bridges and other major projects while $49 billion will be allocated to public transit.
Another $66 billion will be allocated towards passenger and freight rail improvements, a chunk of which could require increased use of energy during both the improvement process and the usage thereafter.
Analyst for PVM Oil Associates, Tamas Vargas also noted the economic rebound of China as a marker for increased oil prices.
“The impressive growth in Chinese October exports and imports implies that the health of the world’s second-biggest economy is on the mend,” said in a conversation with The Globe and Mail.
“Saudi Arabia also reckons that the next few weeks will be tight, this is why its official selling price to Asia was increased by $1.40 a barrel” he added.
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