Oil rises on hopes of recovery in demand

30 Dec Oil rises on hopes of recovery in demand

Oil gained more ground on Wednesday as a U.S. coronavirus fiscal aid package and a decline in crude oil inventories lifted prices.

Brent crude futures rose 19 cents, or 0.4%, to $51.28 a barrel, by 0255 GMT and U.S. West Texas Intermediate (WTI) crude rose 29 cents, or 0.6%, to $48.29.

“Oil prices have remained supported by a weaker U.S. dollar overnight and have finally found a friend in the API inventory report,” said Stephen Innes, chief global market strategist at Axi, a broker.

“This morning the American Petroleum Institute reported a much larger draw versus consensus in crude oil inventories for the week ending December 25.”

The dollar fell to its lowest in more than two years against the euro as currency traders looked past a new delay in U.S. stimulus cheques and maintained bets that additional financial aid was still likely. [USD/]

The Democrat-led U.S. House of Representatives voted to meet President Donald Trump’s demand to increase direct COVID-19 aid payments to Americans hurting from the pandemic to $2,000.

Oil prices could gain strength as vaccination programmes around the world begin next year, allowing countries to relax restrictions on movement and business activity.

U.S. physical crude oil grades strengthened on Tuesday as the API reported a decline in stockpiles, dealers said.

Crude oil stocks fell by 4.8 million barrels last week to about 492.9 million barrels, exceeding analysts’ expectations in a Reuters poll for a draw of 2.6 million barrels, data from API showed. [API/S]

In the short-term, concerns over coronavirus lockdowns are likely to cap gains.