Connect with us

Business

Oil prices rise on hopes of higher demand, Bonny Light up $0.42

Published

on

Oil prices advanced on Wednesday, boosted by a COVID-19 stimulus package in the United States and a decrease in crude oil stockpiles.

Brent crude futures were up by 35 cents or 0.7% at $51.44 per barrel by 09:03 West Africa Time, while U.S West Texas Intermediate rose by 30 cents or 0.6% to $48.30.

Bonny Light, Nigeria’s flagship crude grade, added 42 cents or 0.83% to close at $50.85 per barrel on Tuesday.

“Oil prices have remained supported by a weaker U.S. dollar overnight and have finally found a friend in the API inventory report,” Stephen Innes, chief global market strategist at Axi, told Reuters.

“This morning the American Petroleum Institute reported a much larger draw versus consensus in crude oil inventories for the week ending December 25.”

The dollar fell to multi-year lows against several currencies as traders ignored a fresh delay in U.S. stimulus cheques and maintained bets that further financial aid was possible.

Asian shares touched a historic high with investors betting on a robust economic bounce-back in 2021.

Oil prices might get a boost as vaccination programmes around the world start next year, giving countries the chance to ease restrictions on movement and commercial activities.

U.S. physical crude oil grades strengthened on Tuesday as the API recorded a slump in inventories, according to dealers.

Oil inventories tapered by 4.8 million last week to around 492.9 million barrels, according to data from API, surpassing analysts’ forecasts in a Reuters poll for a draw of 2.6 million barrels.

Read also: Oil prices advance amid optimism of US stimulus package

Worries over coronavirus-induced lockdowns are likely to limit gains in the short term.

Demand for fossil fuel in the years ahead might remain softer even after the pandemic as countries look to restrict emissions to curb climate change, with possible negative implications for oil prices.

Oil majors like BP Plc and Total SE published forecasts that include scenarios where oil demand worldwide may have peaked in 2019.

The Organisation of the Petroleum Exporting Countries (OPEC) and allies are reducing historic oil supply cuts made this year to strengthen the market.

The group known as OPEC+ is on course to rev up output by half a million barrels per day (bpd) in January, with Russia backing a further increase of the same volume in February, which will likely impact oil prices.

Join the conversation

Opinions

Investigations