Oil prices rallied higher at Wednesday’s trading session in London. The gains in crude oil prices are largely attributed to a larger-than-expected decline in U.S. Stockpiles and hopes for a U.S. COVID-19 fiscal aid package boosted fuel demand recovery outlook.
- At the time of writing this report, Brent oil futures traded at $51.44 printing gains of about 0.40% and West Texas Intermediate futures surged by 0.56% to $48.27 a barrel.
What this means
Recent data retrieved from the American Petroleum Institute (API) revealed a drop of 4.785 million barrels for the week ended December 25, much larger than the 2.1-million-barrel drop energy experts anticipated earlier.
What they are saying
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the prevailing macro helping oil prices to stay above key support levels;
- “Oil prices have remained supported by a weaker US dollar overnight and have finally found a friend in the API inventory report. This morning the American Petroleum Institute (API) reported a much larger draw versus consensus in crude oil inventories for the week ended December 25. Any hard-fought gains will be capped by OPEC’s plans to gradually increase oil production after the start of the year despite the new Covid-19 variant increasing government and self-imposed travel restrictions worldwide. We do not have the latest variant in Thailand. Still, the local Covid-19 flare-up has canceled many holiday revelers’ plans and blotted out any New Year’s celebrations, for example.”
With hopes of larger stimulus checks fading, the bullish report comes as a relief and that along with the weaker US dollar should support oil prices in early Asia trade.