Published: Wed, January 13, 2021
Economy | By

Oil Prices Rise On Hopes Of More US Stimulus

Oil Prices Rise On Hopes Of More US Stimulus

Brent crude oil futures climbed 22 cents, or 0.4%, to $55.88 a barrel by 0703 GMT, while US West Texas Intermediate (WTI) gained 25 cents, or 0.5%, to $52.50 a barrel.

Given the recent surge in oil prices and rig additions, US crude production in the Lower 48 states should start to increase from the second quarter of this year, the Energy Information Administration said in a monthly report on Tuesday.

Oil prices hit their highest level in almost a year and were on track for a weekly gain on Friday, supported by Saudi Arabia's pledge to cut output and strong gains in major equity markets.

Brent crude oil prices fell by $1 per barrel on Monday, hit by renewed concerns about global fuel demand amid tough coronavirus lockdowns in Europe and new curbs on movement in China, the world's second-largest oil user, where infections jumped.

Oil also gained on expectations for a drop in USA crude stockpiles.

Saudi Arabia exported about 7 million barrels per day of crude, of which around 70% landed in Asia a year ago, data on Refinitiv Eikon showed.

Crude stocks in the USA dropped by 5.8 million barrels last week to around 484.5 million barrels, data from the American Petroleum Institute showed late on Tuesday.

The ongoing rally in the black gold received a fresh boost after the American Petroleum Institute (API) reported a massive inventory draw in its weekly crude stocks change data published late Tuesday.

But rising COVID-19 death tolls in Europe and the United States and fresh virus containment measures elsewhere weighed on prices.

US President-elect Joe Biden, who takes office on January 20 with his Democratic party in control of both houses of Congress, has promised "trillions" in extra pandemic-relief spending.

However, oil price gains were capped by demand concerns as coronavirus cases rise around the world.

The pandemic claimed its highest USA death toll yet this week, killing more than 4,000 people in a single day, while China reported the biggest rise in daily cases in more than five months and Japan may extend a state of emergency beyond the greater Tokyo region.

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