Oil up on projected economic recovery, inventory draw
Oil prices gained slightly on Tuesday with rising expectations of a faster global economic recovery after the US Senate passed the $1.9 trillion COVID-19 relief bill, and on an expected drawdown in US crude oil inventories.
International benchmark Brent crude was trading at $68.35 per barrel at 0643 GMT for a 0.16% increase after closing Friday at $68.24 a barrel.
American benchmark West Texas Intermediate (WTI) was at $65.07 per barrel at the same time for a 0.03% increase after it ended the previous session at $65.05 a barrel.
Brent breached the $71 threshold on Monday with trade at $71.11, a level not seen since Jan. 8, 2020, when it reached $71.75, while WTI hit its highest level since Oct. 23, 2018, with trade at $67.98.
The decision of OPEC+ members to keep the current production level unchanged, rather than increasing it in line with rising oil prices, was the main driver of higher oil prices. Furthermore, an attack by Yemeni Houthi forces on Saudi Aramco’s facilities also pushed prices higher on Monday.
However, on Tuesday, as the attacks on Saudi Aramco's oil facility had no immediate impact on crude oil output, Brent fell below the $71 threshold.
On Sunday, key oil infrastructure in the eastern Saudi cities of Ras Tanur, and Dhahran were targeted by ballistic missile and drone strikes.
Speculation regarding the perpetrators has largely focused on Yemen's Houthi rebels, who have been responsible for waves of such attacks in the past.
Higher prices were also supported on Tuesday with more optimism on the global economic recovery with the US Senate's approval of President Joe Biden's much-awaited $1.9 trillion COVID-19 relief bill.
US Treasury Secretary Janet Yellen on Monday backed Biden's relief bill, saying Biden's relief bill "is a tremendously important package that will bring hundreds of millions of Americans the relief they need".
"We expect the resources here to really fuel a very strong economic recovery," she said, adding that she expects that the American economy will be back to full employment next year.
The bill has now been sent to the House of Representatives where it will be voted on again in the coming days, after which it will then be sent to the White House. Biden needs to sign it before March 14 if unemployment benefit programs are to be renewed.