Oil extends recovery as optimism over US stimulus increases

Oil rose a third day, buoyed by optimism that a U.S. stimulus package to shore up the coronavirus-battered economy will boost declining demand.

Futures in New York were up 3%, after gaining 2.8% on Tuesday. House Speaker Nancy Pelosi signaled Congress will reach a deal on a massive spending bill, a day after the Federal Reserve unveiled a sweeping set of economic measures. Those efforts also helped equities rebound, with the Dow Jones Industrial average having its best day since 1933.

Concerns about a global glut still hang over the market, with neither Saudi Arabia or Russia as yet showing any sign of backing down on threats to pump more oil to gain market share. Those worries are reflected in the structure of the market, which has sunk further into contango — a sign of oversupply where near-term cargoes are cheaper than those for later. Brent’s six-month time spread widened to levels not seen since 2009.