Oil prices climbed with U.S. stock markets on Tuesday ahead of Joe Biden’s inauguration as U.S. president on optimism that more government stimulus will eventually lift global economic growth.
Brent futures for March delivery rose $1.13, or 2.1%, to $55.88 a barrel by 11:45 a.m. EST (1645 GMT), while U.S. West Texas Intermediate (WTI) crude was 56 cents, or 1.1%, higher at $52.92. Front-month February WTI futures expire on Wednesday.
Wall Street’s main indexes rose after upbeat earnings from big U.S. banks and expected comments from U.S. Treasury Secretary nominee Janet Yellen for hefty fiscal spending ahead of Biden’s inauguration on Wednesday.
“The (oil) complex is seeing a steady start with the help of an equity rally that appears related to expected stimulus from both the Biden White House as well as the Fed,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
Yellen will urge lawmakers to “act big” on the next coronavirus relief package, adding that the benefits outweigh the costs of a higher debt burden.
“As we are approaching the beginning of the Biden administration era in the U.S., traders now have their hopes up for a rapid positive effect on markets coming from the promised ($1.9 trillion) stimulus package,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.
Investors were also upbeat on demand in China, the world’s top crude oil importer, after data showed its refinery output rose 3% to a record high in 2020.
Crude prices rose even though the International Energy Agency (IEA) cut its outlook for oil demand in 2021 but pointed to a recovery in the second half of the year to an annual average of 96.6 million barrels per day.
OPEC’s secretary general, meanwhile, said he was cautiously optimistic the oil market would recover this year from the slump in demand brought about by the coronavirus pandemic.