Oil rose on Tuesday as the United States moved toward expanding pandemic aid payments, which could spur fuel demand and which also encouraged investors to take on more risk in hopes of stronger economic growth.
Brent crude climbed 30 cents, or 0.6%, to $51.16 a barrel, and U.S. West Texas Intermediate (WTI) crude futures settled 38 cents, or 0.8%, higher at $48.
“We are seeing strength in the oil market on the back of progress with the U.S. stimulus package,” said Gary Cunningham, director of market research at Tradition Energy.
The Democratic-led U.S. House of Representatives voted to meet President Donald Trump’s demand for $2,000 COVID-19 relief checks on Monday.
The Republican-controlled Senate will still need to vote on the measure.
Global shares rose for a fourth straight session on Tuesday on the U.S. stimulus hopes.
Still, concerns over coronavirus lockdowns capped gains in the short-term.
A new variant of the virus in the United Kingdom has led to the reimposition of movement restrictions, hitting near-term demand and weighing on prices, while hospitalizations and infections have surged in parts of Europe and Africa.
Oil prices could gain strength as vaccination programs around the world pick up steam next year, said Tony Headrick, energy market analyst at CHS Hedging LLC.
“Optimism around vaccinations has the ability to overwhelm the concerns around coronavirus we are seeing,” he added.
A Jan. 4 meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, also looms over the market.
OPEC+ is tapering record oil output cuts made this year to support the market. The group is set to boost output by 500,000 barrels per day (bpd) in January, and Russia supports another increase of the same amount in February.
Money managers raised their net long U.S. crude futures and options positions in the week to Dec. 21, the U.S. Commodity Futures Trading Commission said on Monday.