By Gina Lee
Investing.com – Oil was up Wednesday morning in Asia, with a bigger-than-expected decline in U.S. crude oil inventories and hopes for a U.S. COVID-19 fiscal aid package boosting fuel demand recovery hopes.
Brent oil futures were up 0.41% to $51.44 by 11:12 PM ET (4:12 AM GMT) and WTI futures rose 0.56% to $48.27.
Tuesday’s crude oil supply data from the American Petroleum Institute (API) showed a draw of 4.785 million barrels for the week ending Dec. 25, bigger than the 2.1-million-barrel draw in forecasts prepared by Investing.com and the 2.7-million-barrel build seen in the previous week.
“Oil prices have remained supported by a weaker dollar overnight and have finally found a friend in the API inventory report,” Axi chief global market strategist Stephen Innes told Reuters.
The dollar remained down on Wednesday morning.
Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day.
The House of Representatives and President Donald Trump approved increasing the amount of Americans’ stimulus checks to $2,000 from $600 earlier in the week. However, Senate Majority Leader Mitch McConnell blocked increasing the amount on Tuesday.
With COVID-19 vaccinations programs currently underway and continuing in 2021, the lifting of restrictions and the resumption of economic activity could see oil prices rise as fuel demand recovers.
However, immediate concerns over the lockdowns and the ensuing impact on fuel demand could cap gains for the black liquid in the short term. The new B117 strain of COVID-19 first seen in southeastern England in September continues to spread, with the U.S. reporting its first case in the state of Colorado. More parts of the U.K. could come under the strictest Tier 4 restrictions soon.
The Organization of the Petroleum Exporting Countries and allies, or OPEC+, is also due to meet in the following week. OPEC+’s Joint Technical Committee and the Joint Ministerial Monitoring Committee will meet on Jan. 3 and 4 respectively. The 13th OPEC and non-OPEC Ministerial Meeting is scheduled for Jan. 4.
The cartel will discuss easing the current production cuts from February onwards during the meetings, with Russia supporting an increase of 500,000 barrels per day. Production is already set to increase by the same amount in January.