Oil prices that showed gains during the week ending Jan. 15, supported by the US announcement to offer higher pandemic relief payments, were limited by the resurgence of virus cases in China after ten months.
International benchmark Brent crude traded at $55.48 at 1300 GMT on Friday, posting a 0.52% increase from Monday when it traded at 0702 GMT registered at $55.19 per barrel.
American benchmark West Texas Intermediate (WTI) traded at $52.83 at the same time on Friday, relative to $51.73 a barrel on Monday.
On Wednesday, oil prices gained 4% to $57.42 a barrel and reached the highest level since Feb. 24 when trade was recorded as high as $57.86.
The price spike was driven by US President-elect Joe Biden’s announcement of his intention to provide trillions of dollars of relief to fight the coronavirus and address economic recovery.
The relief package will provide over $400 billion to directly tackle the pandemic, including funds to speed up vaccine deployment and to safely reopen most schools within 100 days. Individual payments of $1,400 will also be made via the plan.
Investors who hoped that the US stimulus package would help the economic recovery were disappointed when China reported a resurgence of coronavirus cases after ten months. Decisions followed to put nearly 28 million Chinese people back under lockdown as the country tries to combat the coronavirus, which caused the first death in eight months.
-Positive projections cap further declines
The US Energy Information Administration’s (EIA) Short-Term December Energy Outlook (STEO) on Tuesday projects a rise in global oil consumption and production in 2021 and 2022, while global oil inventories will continue to decline during much of that period.
Brent crude oil is expected to average $52.70 a barrel in 2021, recording an 8.59% increase compared to the agency's forecast last month.
Fortifying buoyant estimates, the agency on Wednesday reported a large drawdown in US crude oil inventories for last week.
Commercial crude oil inventories in the US dropped by 3.2 million barrels last week, relative to the market expectation of a 2.7 million-barrel draw.
On Thursday, the Organization of Petroleum Exporting Countries (OPEC) released its Monthly Oil report, which said global oil demand is expected to increase by 6.56%, by 5.9 million barrels per day (bpd), in 2021 to an average of 95.91 million bpd.
By Sibel Morrow