Oil will rise on the stimulus of U.S. stimulus, a tighter market under Biden

NEW YORK (Reuters) – Oil went higher Wednesday in anticipation of U.S. President Joe Biden’s administration delivering a pandemic-related economic boost that will raise fuel demand and implement policies that will tighten on raw supply.

Biden, set up Wednesday, was immediately rushed to take steps to curb the U.S. oil industry, including a plant to re-enter the Paris climate agreement, prompting cancels permit for Keystone XL crude oil pipeline and stops planned drilling in the Arctic.

Brent crude settled at $ 56.08 a barrel, gaining 18 cents. US West Texas Intermediate (WTI) crude settled at $ 53.24 a barrel, climbing 26 cents.

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.

“There are renewed hopes for the stimulus – there is just a good feeling in the markets as a whole, a sense of moving forward and that demand is about to pick up,” said John Kilduff, partner at Again Capital LLC in New York.

Globally, supplies have squeezed from a higher cut than last year by OPEC and its allies, an organization called OPEC +, helping to 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 .

Expected moves to push for carbon reductions, if they block supply, could also drive up prices.

“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.”

The first of two procurement reports is due Wednesday from the American Petroleum Institute. Analysts estimate that crude stock fell 300,000 barrels a week to Jan. 15. Weekly government figures are released Friday, held back by the U.S. establishment. [EIA/S] [API/S]