US stockpile cuts and oil price rises

Oil rose on Wednesday as hopes of US stimulus and a reduction in US inventories supported prices.

Brent crude futures rose 0.18 per cent to $51.18 a barrel, while WTI added 0.33 per cent to $48.16 a barrel.

Oil inventories fell 4.8 million barrels to 492.9 million for the week ended December 25, according to API data, while analysts had expected a decline of 2.6 million barrels.

The dollar fell to its lowest in more than two years against the euro as currency traders failed to react to a new delay in an increase in US stimulus payments and continued to bet that additional bailouts were still likely.

Senate Majority Leader Mitch McConnell on Tuesday postponed a vote to increase stimulus payments to Americans to $2,000 from $600 and urged senators to override President Donald Trump's veto of the defence budget bill.

The US House of Representatives on Monday approved an increase in stimulus payments to $2,000, which Trump demanded. It is unclear whether the Senate, which is under Republican control, will support the move.

In the short term, concerns about lockdowns could limit the rise in oil prices.

Demand for fossil fuels may remain weak in the coming years, even after a pandemic of greenhouse gas emissions control that is designed to slow climate change. Oil majors such as BP Plc (LON:BP) and Total (PA:TOTF) SE have published forecasts that include scenarios in which global oil demand may have already passed its peak in 2019.