MELBOURNE (Reuters) – Oil prices rose in early trading Wednesday, adding to overnight overnight gains, as U.S. administration is expected to step in with major stimulus spending that would boost fuel demand and pull raw stock.
U.S. West Texas Intermediate (WTI) crude futures climbed 23 cents, or 0.4%, to $ 53.21 a barrel at 0155 GMT, building on a 1.2% rise Tuesday.
Brent crude rose 25 cents, or 0.5%, to $ 56.15 a barrel, adding to a 2.1% gain Tuesday.
U.S. Treasury Secretary Joe Biden’s electorate Janet Yellen urged lawyers Tuesday to “get deeply involved” in pandemic relief spending, reaffirming hopes of massive spending to stimulate growth.
“Certainly that is expected to support better growth and better demand in the U.S.,” said National Bank of Australia head of product research Lachlan Shaw.
The oil market continued to rise despite the International Energy Agency’s forecast for oil demand in the first quarter to cut by 580,000 barrels per day, due to tight locks in Europe and closure of borders to prevent COVID-19 infections from going up.
“That clearly confirms Saudi Arabia’s move last week to cut 1 million barrels per day of their own production unilaterally for February and March,” Shaw said.
“The current threat is around coronavirus locks. We’ve seen some countries expand locks. “
Germany on Tuesday extended a lockout for most shops and schools for another two weeks, until Feb. 14.
Traders will be on the lookout for U.S. inventory and crude inventory data due from the American Petroleum Institute on Wednesday and the Energy Information Administration on Friday.
Six analysts surveyed by Reuters estimated that, on average, crude stock fell 300,000 barrels per week to January 15, but they expect gasoline stocks to rise 3.0 million barrels. Distillate deposits, which include diesel, heating oil and jet fuel, have been seen up to 800,000 bbl.
Reciting with Sonali Paul; edited by Richard Pullin