By Adedapo Adesanya
Crude prices pointed north on Wednesday, December 30 with the Brent futures gaining 25 cents or 0.49 per cent to trade at $51.34 per barrel and the West Texas Intermediate (WTI) crude futures rising by 0.83 per cent or 53 cents to trade at $48.33 per barrel.
The bullish outcome was buoyed by the United States coronavirus fiscal aid package and a decline in crude oil inventories. These developments helped the oil market yesterday.
The Democrat-led US House of Representatives voted to meet President Donald Trump’s demand to increase direct COVID-19 aid payments to Americans impacted from the pandemic to $2,000.
President Trump has been calling for the increased payments since the Coronavirus Response and Relief Supplemental Appropriations Act was passed by Congress last week. He reiterated his desire for the higher payments Wednesday morning.
He signed the long-debated bill containing $900 billion of virus relief that’s expected to boost energy demand in the world’s largest economy. Trump had previously expressed his displeasure with the package that Congress approved last week.
Prices were also supported after the Energy Information Administration (EIA) reported an oil inventory drop of 6.1 million barrels for the week to December 25.
In the previous week, the EIA had estimated an inventory decline of almost 600,000 barrels, which helped prices continue higher as it coincided with positive vaccine updates.
Earlier, the American Petroleum Institute (API) also helped boost prices by estimating a crude oil inventory decline of 4.785 million barrels for the same week.
Crude prices are expected to continue strengthening as vaccination programs around the world begin next year, allowing countries to relax restrictions on movement and business activity.
The Oxford-AstraZeneca vaccine was on Wednesday approved for use in the United Kingdom, with the first doses due to be given next Monday.
The Oxford vaccine is easier to store and distribute, as it can be kept at normal fridge temperature, unlike the Pfizer-BioNTech jab that has to be kept at -70°C.
All eyes are also on the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) as they prepare to meet next week.
The OPEC+ alliance plans to return 500,000 barrels a day of output to the market from January, tapering record oil output cuts made this year to support the market. A key signatory to the alliance, Russia has been reported to support another increase of the same amount in February.
Dipo Olowookere