Oil futures rose Wednesday, with the U.S. benchmark building on a push to a one-year high, after data from an industry group showed a drop in crude and gasoline inventories and traders cheered prospects for another round of aid spending by the U.S. government.
West Texas Intermediate crude for March delivery rose 46 cents, or 0.8%, to $55.22 a barrel on the New York Mercantile Exchange, after posting the highest close since January. April Brent crude, the global benchmark, was up 60 cents, or 1%, to $58.06 a barrel on ICE Futures Europe.
The American Petroleum Institute late Tuesday said that U.S. crude supplies fell by 4.3 million barrels for the week ended Jan. 29, according to sources. The data also showed gasoline stockpiles down by 240,000 barrels, while distillate inventories declined by 1.6 million barrels.
Crude stocks at the Cushing, Okla., storage hub, meanwhile, fell 1.9 million barrels for the week, sources said.
More closely followed data from the Energy Information Administration will be released Wednesday morning. Analysts surveyed by S&P Global Platts, on average, expect the EIA data to show crude inventories down by 2.4 million barrels. The survey also showed expectations for an inventory increase of 1.5 million barrels for gasoline and a decline of 1.3 million barrels for distillates.
Meanwhile, optimism around a push for another round of pandemic relief spending was “putting a bid in all risk assets, including crude oil,” said Robert Yawger, director of energy futures at Mizuho Securities, in a note.
President Joe Biden has called for a $1.9 trillion package, while a group of 10 Republican senators this week countered with a proposal for a roughly $600 billion package. The Senate on Tuesday voted 50-49 to open a debate on budget resolution for the 2021 fiscal year, a move that paves the way for much of Biden’s stimulus package to become law without the need for any Republican support.
“Last week it was looking as if there might not be enough support for a stimulus program. Now there is basically a $600 billion stimulus call in the market, with 10 Republicans and 50 Democrats enough to pass,” Yawger said. “Further negotiations should be able to increase that amount…in my opinion to around $1.4 trillion.”