Oil was up Wednesday morning in Asia, holding onto gains seen during the previous session. Expectations that the incoming Joe Biden administration will push through more, massive U.S. stimulus measures boosted hopes for fuel demand and a drawdown on crude oil stocks.
Brent oil futures were up 0.68% to $56.28 by 11 PM ET (4 AM GMT) adding to Tuesday’s 2.1% gain. WTI futures gained 0.79% to $53.40, building on a 1.2% rise seen on Tuesday. Both Brent and WTI futures remained firmly above the $50 mark.
Secretary of the Treasury nominee Janet Yellen urged Congress to “act big” on pandemic relief spending during her Senate confirmation hearing before the Senate Finance Committee on Tuesday. The comments served to re-enforce investor hopes of massive U.S. spending to boost economic recovery and growth from COVID-19.
“Certainly, the expectation is that will support better growth and better demand in the U.S.,” National Australia Bank (OTC:NABZY) (NAB) head of commodity research, Lachlan Shaw, told Reuters.
Even a 580,000 barrels-per-day cut in the International Energy Agency (IEA)’s outlook for first-quarter oil demand failed to dampen sentiment for the black liquid.
The IEA’s cut came as the incessant rise in COVID-19 numbers see tight lockdowns and border closures in Europe.
“That clearly vindicates the move by Saudi Arabia last week to cut 1 million barrels per day of their own production unilaterally for February and March ... the risk right now is around COVID-19 lockdowns. We’ve seen some countries extending lockdowns,” NAB’s Shaw added.
Germany on Tuesday extended a lockdown for most shops and schools for another two weeks to Feb. 14.
Investors now await U.S. crude oil supply data from the American Petroleum Institute, which is due later in the day.
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