Oil holds above $50/barrel on U.S. stocks draw, Brexit deal hopes


© Reuters. Crude oil storage tanks are seen in an aerial photo at the Cushing Oil Hub

By Yuka Obayashi and Dmitry Zhdannikov

TOKYO / LONDON (Reuters) – Oil prices fell on Thursday but held well above $ 50 a barrel in light holiday trade as a fall in US stocks spurred hope of demand, while hints of an impending Brexit deal supported investor risk appetite.

futures fell 30 cents or 0.6% to $ 50.90 per share. barrel at 1100 GMT, while US West Texas Intermediate (WTI) crude fell 34 cents or 0.7% to $ 47.70.

Both contracts received more than 2% on Wednesday.

“Lower U.S. inventories of crude oil and fuel, as well as signs of a potential Brexit deal leading to weaker U.S. dollars, were good news,” said Hiroyuki Kikukawa, general manager of research at Nissan (OTC 🙂 Securities.

“But long-standing concerns about a new variant of the new coronavirus limited gains,” he said, adding that oil markets were quiet with investors in holiday mode.

inventories fell by 562,000 barrels in the week to Dec. 18 to 499.5 million barrels, the Energy Information Administration (EIA) said Wednesday.

Gasoline inventories fell by a surprise of 1.1 million barrels to 237.8 million barrels, said EIA, while distillate stocks fell by more than expected 2.3 million barrels to 148.9 million barrels.

Oil prices also received support from the news that Britain and the EU were on the verge of concluding a narrow trade agreement that swung away from a chaotic finale to the Brexit split.

“Investor risk appetite also improved due to a recovery in global equities, which underscored that fears of a new variant of coronavirus have fallen slightly,” said Satoru Yoshida, a commodities analyst at Rakuten Securities.

At least four drug manufacturers expect their COVID-19 vaccines to be effective against the new rapidly spreading variant of the virus that is raging in the UK, and are conducting tests that should provide confirmation in a few weeks.

On the supply side, U.S. energy companies this week added oil and rigs for a fifth week in a row.

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