Oil rose on Tuesday for the third time in four sessions on expectations for rising fuel demand, as the United States moved towards expanding its pandemic aid payments and with a final Brexit deal set to stabilize trade between Europe and the UK.
Brent crude was up 49 cents, or 1%, at $51.35 a barrel by 0756 GMT, while U.S. West Texas Intermediate (WTI) crude futures added 41 cents, or 0.9%, to $48.03 a barrel.
"Markets feel very rangy into the New Year, but should find support today from broader risk markets as stocks are soaring on the prospects of larger stimulus checks," said Stephen Innes, chief global market strategist at Axi, a broker.
"However, for oil markets gains could be limited due to the new COVID variant and OPEC meeting overhangs."
Crude rose along with a gains in Asian shares, with Japanese stocks hitting a 30-year high on rising investor risk appetite as the U.S. House of Representatives voted to raise pandemic relief payments to $2,000 from $600.
The Senate still needs to vote on the measure.
Forecasts for tightening U.S. crude oil stocks also added support to prices.
U.S. crude oil stockpiles are expected to have declined last week, while refined products inventories likely rose, a preliminary Reuters poll ahead of this week's data showed on Monday.
Five analysts polled by Reuters estimated on average that crude stocks likely fell by 2.1 million barrels in the week to Dec. 25.
Still, concerns over coronavirus lockdowns capped gains.
A new variant of the virus in the United Kingdom has led to the reimposition of movement restrictions, hitting near-term demand and weighing on prices, while hospitalizations and infections have surged in parts of Europe and Africa.
A Jan. 4 meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, also looms over the market.
OPEC+ is tapering record oil output cuts made this year to support the market. The group is set to boost output by 500,000 barrels per day (bpd) in January, and Russia supports another increase of the same amount in February.
Russian Deputy Prime Minister Alexander Novak said on Monday he expected that in 2021 there would be 5 million to 6 million bpd of additional oil demand, which has not fully recovered from the pandemic.
Money managers raised their net long U.S. crude futures and options positions in the week to Dec. 21, the U.S. Commodity Futures Trading Commission said on Monday.
The speculator group raise its combined futures and options position in New York and London by 4,455 contracts to 325,787 during the period. (Reuters)