Oil rises on falling crude stocks, demand hopes on stimulus and vaccine rollouts

By Sonali Paul
MELBOURNE, Feb 3 (Reuters) - Oil rose in early trade on
Wednesday on expectations global oil stocks will fall back to
more normal levels this year and as U.S. lawmakers moved closer
to approving President Joe Biden's $1.9 trillion COVID-19 aid
bill without Republican support.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
climbed 11 cents, or 0.2%, to $54.87 a barrel at 0130 GMT, in a
third straight day of gains. The benchmark hit a one-year high
of A$55.26 on Tuesday.
Brent crude LCOc1 futures rose 16 cents, or 0.3%, to
$57.62 a barrel, in a fourth straight day of gains after hitting
$58.05 on Tuesday, its highest in more than 11 months.
Analysts said the market was buoyed by the latest assessment
by the Organization of the Petroleum Exporting Countries and
allies, together known as OPEC+, that oil stockpiles will
decline to below a five-year average by June.
That showed the producers' output cuts were succeeding in
bringing the market back into balance.
"The strategy was very clear. OPEC and allies set out to cut
a deal that would normalise global excess inventory through 2021
- well, they're on track," said Lachlan Shaw, head of commodity
research at National Australia Bank.
OPEC+ expects output cuts will keep the market in deficit
throughout this year, peaking at 2 million barrels per day in
May, even though it revised down its outlook for demand growth,
a document seen by Reuters on Tuesday showed. Further supporting the market, industry data after the
market closed on Tuesday showed U.S. crude and gasoline
inventories fell unexpectedly.
The American Petroleum Institute, an industry group,
reported U.S. crude oil inventories fell by 4.3 million barrels
in the week to Jan. 29, compared with analysts' expectations in
a Reuters poll for a build of 446,000 barrels.
API/S
Gasoline stocks fell by 240,000 barrels, defying analysts'
expectations for a build of 1.1 million barrels, while
distillate inventories, which include heating oil and jet fuel,
fell by 1.6 million barrels, a bigger draw than expected.
U.S. government data is due at 1530 GMT from the Energy
Information Administration.
Analysts said while there are still short-term risks around
demand due to the spread of COVID-19, vaccines are being rolled
out successfully and should lead to lockdowns being eased and
people moving around more.
"So I think that's certainly buttressing demand hopes,
together with impacts from stimulus," NAB's Shaw said.