Oil rises above $ 56 as a tighter supply offsets concern about the virus

    LONDON (Reuters) – Oil rose above $ 56 a barrel on Tuesday and remained near an 11-month high as tighter supply and expectations of a decline in U.S. inventories offset concerns over rising US stocks. coronavirus cases globally.

    Saudi Arabia said it will cut production by an additional 1 million barrels per day (bpd) in February and March to stop inventories from build. The latest US oil supply reports are expected to show that crude oil inventories have declined for the fifth consecutive week. [EIA/S]

    Brent crude oil was up 58 cents, or 1%, to $ 56.24 a barrel by 0920 GMT, while the U.S. West Texas Intermediate (WTI) gained 42 cents, or 0.8%, on $ 52.67.

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    “I think the market will be quick to conclude that yesterday’s modest price drop, provided the spread of the virus in China remains contained, was just a blip on the radar screen,” Stephen Innes, chief executive said in a report. Axi’s global market strategist.

    US President-elect Joe Biden, who will take office on January 20 with his Democratic party in control of both houses of Congress, has pledged “trillions” of extra pandemic relief expenses.

    Oil also gained in anticipation of a further decline in US crude inventories. Analysts in a Reuters poll predict crude oil inventories will decline by 2.7 million barrels for the fifth consecutive week of declines.

    The first of two supply reports this week, from industry group, the American Petroleum Institute, is expected at 21:30 GMT.

    Concerns over demand due to the increase in coronavirus cases around the world have limited earnings.

    Chinese authorities introduced new curbs in areas surrounding Beijing on Tuesday, blocking 4.9 million residents. Japan will extend the state of emergency beyond Tokyo as virus cases increase.

    Additional reporting by Jessica Jaganathan; Editing by Kirsten Donovan

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