Oil rose above $56.00 a barrel on Wednesday, supported by expectations the new U.S. administration will deliver massive stimulus spending that would lift demand, as well as by curbs by the Organization of the Petroleum Exporting Countries and forecasts of a drop in U.S. crude inventories.
U.S. Treasury Secretary nominee Janet Yellen on Tuesday urged lawmakers to “act big” on pandemic relief spending. Analysts say a fall in the dollar after the comments helped oil to rally.
Brent crude was up 59 cents, or 1%, to $56.49, after a 2.1% gain on Tuesday. U.S. West Texas Intermediate (WTI) crude climbed 55 cents, or 1%, to $53.53.
President-elect Joe Biden’s inauguration is set for 12 noon EST on Wednesday.
A record output cut by OPEC and its allies, known as OPEC+, in 2020 helped lift prices from historic lows.
This month Brent hit an 11-month high of $57.42, helped by Saudi Arabia pledging to make additional, voluntarily cuts and most OPEC+ members agreeing to keep output steady in February.
Oil drew more support from expectations of lower U.S. crude inventories. Analysts estimate crude stocks fell by 300,000 barrels. The first of the week’s two supply reports is due on Wednesday from the American Petroleum Institute.
Gains were limited by concern about near-term demand as COVID-19 infections rise.