NEW YORK (Reuters) – Oil rose on Wednesday in anticipation of U.S. President Joe Biden’s administration delivering a major stimulus boost that will raise fuel demand and implement policies that tighten crude supply.
Brent crude went up 40 cents at $ 56.30 a barrel at 12:23 pm (1722 EST) US West Texas Intermediate (WTI) crude rose 37 cents, or 0.7%, to $ 53.35.
U.S. President Joe Biden, who was inaugurated on Wednesday, is expected to take steps to curb the U.S. oil industry, including a reversal of a climate deal Paris, cancels license for Keystone XL crude oil pipeline and stops arctic drilling.
“I think the Biden administration on the first day is making it clear that there is a new sheriff in town and we are going to return to policies that are green energy and anti-fossil fuels,” said Phil Flynn , a senior analyst at Chicago Futures Pricing Group. “This is going to mean higher prices and the market is starting to price in that situation.”
U.S. Treasury Secretary Janet Yellen’s nominee on Tuesday urged lawyers to be “very active” on pandemic relief spending, which has led to rising oil prices. The dollar fell after the comments helped oil to rally, analysts said.
“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.”
Higher yields than were cut by OPEC and its allies, an organization called OPEC +, last year 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 300,000 barrels a week to Jan. 15. The first of two supply 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.
China’s capital, Beijing, on Wednesday announced tougher COVID-19 control measures. Germany on Tuesday extended a lockout for most shops and schools.
Additional commentary by Alex Lawler in London, Sonali Paul in Melbourne and Shu Zhang in Singapore; Edited by Jason Neely, David Goodman and David Gregorio