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Oil Up With Surprise Crude Oil Supply Draw Eases Fuel Demand Jitters

SP Futures according to Investing.com (December 17, 2020) - Oil was up on Thursday morning in Asia, with a surprise drop in U.S. crude oil supply and hopes that the U.S. Congress will pass the latest stimulus measures easing fuel demand jitters.

Brent oil futures rose 0.92% to $51.55 by 10:43 PM ET (3:43 AM GMT) and WTI futures jumped 1% to $48.30. Both Brent and WTI futures saw their highest levels since early March.

Crude oil inventory data from the U.S. Energy Information Administration (EIA) released on Wednesday showed a draw of 3.135 million barrels for the week to Dec. 11. This was larger than the 1.937-million-barrel draw in forecasts prepared by Investing.com and the 15.189-million-barrel build seen in the previous week. The EIA comes a day after the American Petroleum Institute reported a 1.973-million-barrel build in crude oil supplies.

The EIA data also showed that refinery crude runs fell by 253,000 barrels per day in the past week and that refinery utilization rates fell by 0.8 percentage points in the week. 

Investors now await whether Senate Majority Leader Mitch McConnell, Republicans and Democrats will deliver on his promise “we’re gonna get there” for the latest stimulus measures. The two sides were reportedly “closing in on” approving a $900 billion stimulus bill on Wednesday. Work also continues on passing a $1.4 trillion spending bill for the fiscal year beginning on Oct. 1 by Friday to avert a government shutdown.

Also boosting oil prices was the Federal Reserve’s policy decision, handed down on Wednesday at the conclusion of a two-day policy meeting. The decision confirmed the Fed’s strengthened commitment to support the U.S. economy by maintaining its asset purchase program until it sees “substantial further progress” in employment and inflation. With the U.S. continuing to grapple with a second wave of COVID-19 cases, Fed Chairman Jerome Powell added that said the case for fiscal stimulus is “very, very strong”

On the vaccines front, an unprecedented COVID-19 immunization drive, which could see thousands more healthcare workers inoculated, continues despite some hiccups on the way. Alaska reported the first known allergic reaction to BNT162b2, the COVID-19 vaccine developed by Pfizer Inc (NYSE:PFE) and BioNTech SE (NASDAQ:BNTX). Meanwhile, Moderna Inc's (NASDAQ:MRNA) COVID-19 vaccine mRNA-1273 is expected to receive U.S. regulatory authorization by the end of the week.