Oil above $ 56 on US stimulus hopes ahead of Biden’s inauguration

LONDON (Reuters) – Oil surged above $ 56 a barrel on Wednesday, supported by expectations that the new US administration will provide massive spending stimulus that would lift demand, OPEC brakes and predictions of a decline in crude oil inventories. Americans.

US Treasury Secretary candidate Janet Yellen on Tuesday urged lawmakers to “act big” on pandemic relief spending. A drop in the dollar after comments helped oil rise, analysts said.

“This has provided a good context for oil and other risk assets,” said Stephen Brennock of the PVM broker. “As the short-term demand environment continues to be plagued with weakness and uncertainty, the future is brightening.”

Brent crude oil was up 40 cents, or 0.7%, to $ 56.30 at 9:15 GMT, adding a 2.1% gain on Tuesday. US West Texas Intermediate (WTI) crude rose 48 cents, or 0.9%, to $ 53.46.

President-elect Joe Biden’s inauguration is later Wednesday.

“In general, oil should maintain a positive outlook until Republicans in the US Senate signal how supportive or disliked they will be of Biden’s proposed stimulus initiatives,” said Jeffrey Halley of OANDA brokerage.

A record cut in production by OPEC and its allies, known as OPEC +, in 2020 helped to raise prices from historical lows. Brent topped an 11-month high of $ 57.42 this month, helped by Saudi Arabia’s commitment to voluntarily curb its production, and most OPEC + members decided not to pump more in February .

Oil got more support from lower US crude oil inventories expectations. Analysts estimate that average crude oil inventories fell by 300,000 barrels. The first of the week’s two supply reports is scheduled for Wednesday from the American Petroleum Institute. [EIA/S]

Concern for short-term demand as COVID-19 infections continue to rise, gains limited.

On Wednesday, the Chinese capital, Beijing, announced some stricter control measures on COVID-19.

Germany on Tuesday extended the lockdown for most shops and schools for another two weeks.

Additional reporting by Sonali Paul in Melbourne and Shu Zhang in Singapore; modification of