Oil prices rise as optimism over economy outweighs fuel demand concerns

Oil prices climbed on Tuesday as optimism that government stimulus will buoy global economic growth and oil demand trumped concerns that renewed COVID-19 pandemic lockdowns globally could cool fuel consumption.

Brent crude futures for March gained 55 cents, or 1%, to $55.30 a barrel by 0737 GMT after slipping 35 cents in the previous session. U.S. West Texas Intermediate crude was at $52.52 a barrel, up 16 cents, or 0.3%. There was no settlement on Monday as U.S. markets were closed for a public holiday. Front-month February WTI futures expire on Wednesday.

Investors are upbeat about demand in China, the world’s top crude oil importer, after data released on Monday showed its refinery output rose 3% to a new record in 2020. China was also the only major economy in the world to avoid a contraction last year as many nations struggled to contain the COVID-19 pandemic.

Oil prices have also been supported by Saudi Arabia’s additional supply cuts in the next two months which are expected to draw down global inventories by 1.1 million barrels per day in the first quarter, ANZ analysts said. Concerns about rising COVID-19 cases globally and renewed lockdowns weighing down fuel demand kept a lid on oil prices. ANZ analysts flagged concerns about falling fuel sales in India in January from December and rising COVID-19 cases in China and Japan that could dampen oil demand.

Oil prices rise as optimism over economy outweighs fuel demand concerns, Reuters, Jan 19