Oil rises on hopes US stimulus will spur fuel demand
New variant of virus in UK has led to the reimposition of movement restrictions. PHOTO: REUTERS
Oil rose on Tuesday as the United States moved towards expanding pandemic aid payments, potentially spurring fuel demand and stimulating economic growth, which pushed investors to take on more risk.
Brent crude was up $0.72, or 1.4%, at $51.58 a barrel by 1057 GMT, while US West Texas Intermediate (WTI) crude futures added $0.67, or 1.4%, to $48.29 a barrel.
“Oil appears to be underpinned by the passing of the US stimulus and government funding omnibus legislation,” Oanda market analyst Jeffrey Halley said.
The Democratic-led US House of Representatives voted to meet President Donald Trump’s demand for $2,000 Covid-19 relief cheques on Monday. The Republican-controlled Senate will still need to vote on the measure.
Global shares rose for a fourth straight session on Tuesday on the US stimulus hopes. Still, concerns over coronavirus lockdowns capped gains.
A new variant of the virus in the United Kingdom has led to the reimposition of movement restrictions, hitting near-term demand and weighing on prices, while hospitalisations and infections have surged in parts of Europe and Africa.
A January 4 meeting of the Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, also looms over the market.
OPEC+ is tapering record oil output cuts made this year to support the market. The group is set to boost output by 500,000 barrels per day (bpd) in January, and Russia supports another increase of the same amount in February.
Russian Deputy Prime Minister Alexander Novak said on Monday he expected that in 2021 there would be 5 to 6 million bpd of additional oil demand, which has not fully recovered from the pandemic.
Money managers raised their net long US crude futures and options positions in the week to December 21, the US Commodity Futures Trading Commission said on Monday.
The speculator group raised its combined futures and options position in New York and London by 4,455 contracts to 325,787 during the period.