Oil prices rise, hit nine-month high on US stimulus progress

[NEW YORK] Oil climbed on Thursday and touched a nine-month high, with traders optimistic about progress toward a US fiscal stimulus deal and record-breaking refining demand in China and India.

US lawmakers edged closer to agreement on a US$900 billion virus-relief spending package on Wednesday.

The US dollar set a 2-1/2 year low against major rivals on Thursday. Since crude is priced in greenbacks, this made oil cheaper for buyers holding other currencies.

Brent crude futures settled up 42 cents at US$51.50 a barrel, and touched a session high of US$51.90.

US West Texas Intermediate (WTI) crude futures rose by 54 cents to US$48.36 a barrel, with a session high of US$48.59.

Both benchmarks hit their highest since early March.

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"Asia was ahead of the curve in recovery mode from the Coronavirus," said Phil Flynn, senior analyst at Price Futures in Chicago. "Looking at what we're seeing in Asia is raising expectations that in the New Year we will see a rapid increase in crude oil demand, as the vaccine rolls out in the US," he said.

The United States on Thursday expanded its campaign to deliver Covid-19 vaccine shots.

US crude inventories fell by 3.1 million barrels in the week to Dec 11, the Energy Information Administration said, far more than analysts' expectations of a 1.9-million-barrel drop.

"It seems to be a much better festive season than most bullish traders could expect for. But whether oil prices can remain as high and keep these gains is still questionable amid the demand destruction lockdowns are causing," said Bjornar Tonhaugen at Rystad Energy.

REUTERS