Oil prices climbed on Tuesday, the third time in four trading sessions, on hopes of fuel demand recovery, as the U.S. drew closer to expanding its pandemic aid payments and with a final Brexit deal on track to stabilise trade between Europe and Britain.
Brent crude, the benchmark for Nigerian oil grades, rose by 49 cents or 1% to $51.35 per barrel at 08:56 West Africa Time, while US West Texas Intermediate (WTI) crude futures jumped 41 cents or 0.9% to $48.03.
“Markets feel very rangy into the New Year, but should find support today from broader risk markets as stocks are soaring on the prospects of larger stimulus checks,” Stephen Innes, chief global market strategist at broker Axi said.
“However, for oil markets gains could be limited due to the new COVID variant and OPEC meeting overhangs.”
Oil prices appreciated simultaneously with Asian shares, with Japanese stocks touching their peak in 30 years on improving investors risk appetite as U.S. House of Representatives voted to increase pandemic relief payments to $2,000 from $600. The measure is now awaiting Senate approval.
Projections for reducing U.S. oil inventories also boosted oil prices.
U.S. crude stocks were anticipated to fall last week, while refined products inventories likely increased, a preliminary Reuters poll ahead of this week’s data revealed on Monday.
A new variant of the novel coronavirus has sparked off a re-introduction of movement restrictions in the United Kingdom, hammering near-term demand and impacting oil prices, while hospital admissions and cases have soared in parts of Europe and Africa.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a cartel known as OPEC+, are reducing historic oil supply cuts made this year to bolster the market. The cartel is poised to strengthen output by half a million barrels per day in January, and Russia is backing a further increase of the same amount in February, which could impact oil prices.
Alexander Novak, Russian deputy prime minister, said on Monday he envisaged between 5 million and 6 million addition to oil demand in the year ahead.
Money changers lifted their net long U.S. crude futures and options positions in the week to 21st December, according to the U.S. Commodity Futures Trading Commission.
It upped its combined futures and options position in New York as well as London by 4,455 contracts to 325,787 in the period.