Oil Up on Hopes of Demand Recovery, Lower U.S. Inventories

Oil gained ground on Wednesday as a U.S. coronavirus fiscal aid package and a decline in crude oil inventories lifted prices.

Brent crude futures rose 35 cents, or 0.7, to 51.44 a barrel by 0803 GMT and U.S. West Texas Intermediate WTI crude added 30 cents, or 0.6, to 48.30 a barrel.

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

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 slumped to multiyear lows against many currencies as traders looked past a new delay in U.S. stimulus cheques and maintained bets that additional financial aid was still likely.

Asian shares hit a record high with investors betting on a strong economic recovery next year, as there is little sign policymakers wind back massive stimulus efforts aimed at staving off coronavirusfuelled downturns. 

Oil prices could gain more strength as vaccination programmes around the world begin next year, allowing countries to relax restrictions on movement and business activity.

U.S. physical crude oil grades strengthened on Tuesday as the API reported a decline in stockpiles, dealers said.

Crude oil stocks fell by 4.8 million barrels last week to about 492.9 million barrels, exceeding analysts expectations in a Reuters poll for a draw of 2.6…

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