Oil prices rise on expected economic recovery, likely drawdown in oil stocks
Oil prices rose on Tuesday on expectations of a recovery in the global economy after the U.S. Senate approved a $1.9 trillion stimulus bill and on a likely drawdown in crude oil inventories in the United States, the world’s biggest fuel consumer.
But a stronger dollar and receding fears of a supply disruption from Saudi Arabia, the world’s biggest oil exporter, after an attack on its export facilities capped price gains.
Brent crude futures for May rose by 53 cents, or 0.8 %, to $68.77 a barrel by 0436 GMT, while U.S. West Texas Intermediate (WTI) crude for April rose 44 cents, or 0.7%, to $65.49.
“Fundamentals remain incredibly supportive, especially with Saudi Arabia in full control pursuing a tight oil policy,” Stephen Innes, chief global markets strategist at Axi said in a note.
On Monday, Brent crude oil prices rose above $70 a barrel after Yemen’s Houthi forces fired drones and missiles at the heart of the Saudi oil industry, including a Saudi Aramco facility at Ras Tanura vital to petroleum exports.
Riyadh said there were no casualties or loss of property and prices ended the day lower.
Still, the United States expressed alarm at “genuine security threats” to Saudi Arabia from Yemen’s Iran-aligned Houthis and elsewhere in the region, and said it would look at improving support for Saudi defences.
The attacks came after the Organization of the Petroleum Exporting Countries (OPEC), Russia and their oil producing allies, known as OPEC+, agreed last week agree on broadly sticking with output cuts despite rising crude prices.
Investor focus, meanwhile, remains on the prospects for a global economic recovery.
U.S. Treasury Secretary Janet Yellen said on Monday that President Joe Biden’s $1.9 trillion coronavirus aid package will provide enough resources to fuel a “very strong” U.S. economic recovery. The House of Representatives must still pass the Senate version of the package for it to become law.
U.S. crude oil and refined product stockpiles likely fell last week, with distillate inventories seen drawing down for fifth straight week, a preliminary Reuters poll showed on Monday.
“The fundamentals have not changed at all for oil and some investors might be automatically buying crude on any dip,” said Edward Moya, senior market analyst at OANDA.