Oil times rose on Wednesday, in anticipation of a winning streak that extended expectations of another major round of U.S. government spending and after industry data showed a sharp drop in crude investments.
West Texas Raw Intermediate for Delivery in March CL.1,
CLH21,
rose 36 cents, or 0.6%, to $ 58.72 a barrel on the New York Mercantile Exchange, setting the U.S. benchmark on the track for an eight-day winning streak. April Brent crude BRN00,
BRNJ21,
the global benchmark, up 46 cents, or 0.7%, at $ 61.55 a barrel on ICE Futures Europe, on track to extend its winning streak to nine days.
“As Brent prices rise above $ 60 per barrel, there is little reason to doubt that demand bases will justify a further recovery in oil prices to a long-term equilibrium of $ 65 per barrel and possibly later by the end of the year as we are just beginning to modernize the US Reflation Trading Engines, ”Stephen Innes, Axi’s chief global markets strategy, said in a note.
The so-called reflation trade is driven by the prospect of another major dose of fiscal stimulus by the U.S. with President Joe Biden calling for a $ 1.9 trillion aid package to boost the spread of coronavirus infection. The final package of that price tag is expected to be shy but closer than previously expected.
Meanwhile, the American Petroleum Institute reported late Tuesday that U.S. crude supply fell 3.5 million barrels for the week ending Feb. 5, according to sources. However, the data also showed gasoline stockpiles rose 4.8 million barrels, while distillate deposits declined by 487,000 barrels.
Meanwhile, crude stock at the Cushing, Okla. Storage facility went down 1.4 million barrels for the week, sources said.
Closer investment data from the Energy Information Administration will be released on Wednesday. On average, the EIA is expected to show crude investments down 2.7 million barrels, according to a study by analysts conducted by S&P Global Platts. The study also shows expectations for an inventory increase of 2.7 million barrels for gasoline and a decline of 1.7 million barrels for brewers.