SINGAPORE- Brent crude futures edged up 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 rose 17 cents, or 0.3 percent, to $54.92 a barrel by 0150 GMT after slipping 35 cents in the previous session.
US West Texas Intermediate crude CLc1 was at $52.25 a barrel, down 11 cents, or 0.2 percent. There was no settlement on Monday as US markets were closed for a public holiday. Frontmonth 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 percent 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.
“Yesterday’s data out of China was a positive for oil prices,” Michael Mc- Carthy, chief market strategist at CMC Markets in Sydney said.
Investors are watching out for US President-elect Biden’s inauguration speech on Wednesday for details on the country’s $1.9 trillion aid package.
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.
“In Europe and the US, the slow rollout of vaccines is also raising concerns that a rebound in demand will remain elusive,” the bank said.
Meanwhile, Global energy majors including Royal Dutch Shell and Total are expected to benefit most from January’s gas price spike, beating rival trading houses and non-integrated producers thanks to their access to multiple sources of the fuel.
Asian liquefied natural gas (LNG) prices have rocketed to record highs in January due to low stocks, a cold winter, global production outages and shipping delays. They have outpaced prices in much of Europe and the United States, where gas is abundant, creating an arbitrage opportunity for sellers.
