LONDON (Reuters) – Oil rose above $ 56 a barrel Wednesday, backed by new U.S. administration delivery expectations of a major boost in demand-driven spending, as well as OPEC loops and forecasts of falling U.S. crude investments .
U.S. Treasury Secretary Janet Yellen’s nominee urged lawyers to “get involved” in the widespread use of pandemic relief. The dollar fell after the comments helped oil to rally, analysts said.
“This was a great place for oil and other risk funds,” said Stephen Brennock of PVM broker. “While there is weakness and uncertainty in a near-term demand environment, the future is clear.”
Brent crude rose 42 cents, or 0.8%, to $ 56.32 at 1004 GMT, after a 2.1% gain on Tuesday. The U.S. West Texas Intermediate (WTI) crude climbed 51 cents, or 1%, to $ 53.49.
The inauguration of President Joe Biden is Wednesday.
“Increased fiscal support means higher growth and higher oil demand than the US,” said Eugen Weinberg of Commerzbank. “In addition, the oil market is likely to remain in short supply both in the first quarter and in the year as a whole.”
A higher yield cut by OPEC and its allies, known as OPEC +, in 2020 helped lift prices from historic levels.
This month Brent hit an 11-month high of $ 57.42, with help from Saudi Arabia promising further, voluntary cuts and a majority of OPEC + members agreeing to keep yields stable in February.
Oil attracted more support from the eyes of U.S. crude investments. Analysts estimate that crude stock fell by 300,000 barrels. The first of two procurement reports is due Wednesday from the American Petroleum Institute. [EIA/S]
Benefits were limited by concerns about near-term demand as COVID-19 infections rise.
The Chinese capital Beijing has announced some tougher COVID-19 control measures. Germany on Tuesday extended a lockout for most shops and schools.
Further statement by Sonali Paul in Melbourne and Shu Zhang in Singapore; edited by Jason Neely