By Adedapo Adesanya
Oil futures closed higher on Tuesday on the back of news that negotiations with lawmakers in the United States on a spending bill showed progress, supporting the demand outlook.
The international benchmark futures, Brent crude rose by 1.27 per cent or 54 cents to trade at $43.16 per barrel while the US benchmark West Texas Intermediate (WTI) crude futures jumped by 1.54 per cent or 63 cents to trade at $41.46 per barrel.
US House Speaker, Mrs Nancy Pelosi, on Tuesday said that a bill for a compromise stimulus package is being written, raising hopes that lawmakers and the White House may finally make progress.
She noted that uncertainties between President Donald Trump and Senate Republicans, who have opposed a package of $1.8 trillion or more, could pose a hurdle.
The market also received a boost on expectations for a weekly decline in US crude stockpiles. The American Petroleum Institute will release its weekly figures on US oil supplies first and then the Energy Information Administration (EIA) will back up with the official data on Wednesday.
Analysts expect the EIA to report a fall of 1.9 million barrels in domestic crude supplies. That would mark a second-straight weekly inventory decline.
Oil futures had spent part of the session moving lower amid continued concerns that a surge in COVID-19 cases in Europe and the U.S. will limit energy demand.
Several European countries have imposed new restrictions on business activity and travel as COVID-19 cases have risen in recent days. Ireland and Wales imposed serious lockdowns and Italy’s financial centre was planning a curfew.
In the US, the seven-day moving average of new cases, which smooths out daily irregularities, rose to 56,007, its highest since August.
Meanwhile, a virtual committee meeting of the Organization of the Petroleum Exporting Countries and their allies (OPEC+) on Monday did little to calm concerns over waning demand and supply glut, as Russia and Saudi Arabia avoided giving any indication they would reconsider the planned output increase in January.
The current OPEC+ agreement calls for output cuts of 7.7 million barrels a day through December, which will then taper to 5.8 million barrels a day starting in January.
However, the Joint Ministerial Monitoring Committee (JMMC) reiterated their commitment to the output-cut agreement and said it encouraged participating countries to increase efforts to rebalance the market.
Libya this month resumed operations at its largest oil field and with plans to ramp up production, it might depress prices in the next coming days.
