MELBOURNE / SINGAPORE (Reuters) – Oil prices rose Wednesday, adding to solid overnight gains, on expectations that the incoming US administration will move forward with massive stimulus that would boost fuel demand and reduce crude oil inventories.
US West Texas Intermediate (WTI) crude futures were up 37 cents, or 0.7%, to $ 53.35 a barrel at 0427 GMT, rising 1.2% on Tuesday.
Brent crude oil futures rose 35 cents, or 0.6%, to $ 56.25 a barrel, adding a 2.1% gain on Tuesday.
Janet Yellen, candidate for US President-elect Joe Biden’s Treasury Secretary, urged lawmakers Tuesday to “act big” on pandemic relief spending, bolstering hopes of massive spending to stimulate growth.
“Certainly the expectation is that it will support better growth and better demand in the United States,” said National Australia Bank commodity research chief Lachlan Shaw.
However, the market remains concerned about short-term oil demand as the International Energy Agency reduced its forecast for first quarter oil demand by 580,000 barrels per day, due to tight lockdowns and closures. borders to stop dizzying COVID-19 infections.
On Wednesday, China’s capital Beijing announced tougher control measures for COVID-19 and will close a subway station after the city reported the largest daily increase in new COVID-19 cases in more than three weeks. .
The country is experiencing its most severe COVID-19 outbreak since March 2020 ahead of the Lunar New Year holiday season. More than 20 provincial-level regions have asked people to stay over the holidays.
Germany on Tuesday extended the lockdown for most shops and schools for another two weeks, until February 14.
Traders will be watching out for US crude oil and commodity inventory data from the American Petroleum Institute Wednesday and from Friday the Energy Information Administration.
Six analysts interviewed by Reuters estimated, on average, that crude oil inventories fell by 300,000 barrels in the week through January 15, but they expect gasoline inventories to have increased by 3.0 million barrels. Stocks of distillates, which include diesel, heating oil and jet fuel, increased by 800,000 bbl.
Reportage by Sonali Paul in Melbourne and Shu Zhang in Singapore; edited by Richard Pullin