By Jessica Jaganathan
SINGAPORE (Reuters) – Oil prices rose on Tuesday due to expectations of a recovery in the global economy after the US Senate passed a $ 1.9 trillion stimulus bill and a likely reduction in oil stocks in the United States, the world’s largest consumer of fuel.
But a stronger dollar and fears of a disruption to supplies from Saudi Arabia, the world’s largest oil exporter, after an attack on its export facilities have limited price gains.
Brent oil futures for May rose 53 cents, or 0.8%, to $ 68.77 a barrel at 0436 GMT, while US West Texas Intermediate (WTI) oil for April rose 44 cents, or 0.7%, to $ 65.49.
“The fundamentals continue to provide incredible support, especially with Saudi Arabia in full control, pursuing a restrictive oil policy,” said Stephen Innes, Axi’s chief global markets strategist, in a note.
On Monday, Brent crude oil prices rose above $ 70 a barrel after Yemen’s Houthi forces fired drones and missiles at the Saudi oil industry, including a Saudi Aramco facility in Ras Tanura, vital to oil exports.
Riyadh said there were no casualties or loss of property and that prices ended the day lower.
Still, the United States expressed alarm over “genuine security threats” to Saudi Arabia from Yemeni Houthis aligned with Iran and elsewhere in the region, and said it would seek to improve support for Saudi defenses.
The attacks came after the Organization of Petroleum Exporting Countries (OPEC), Russia and their oil-producing allies, known as OPEC +, agreed last week to maintain production cuts despite rising oil prices.
The investor’s focus, however, remains on the prospects for a global economic recovery.
U.S. Treasury Secretary Janet Yellen said on Monday that President Joe Biden’s $ 1.9 trillion coronavirus aid package will provide sufficient resources to fuel a “very strong” economic recovery in the United States. The House of Representatives has yet to approve the Senate version of the package before it becomes law.
U.S. crude oil and refined product inventories likely fell last week, with distillate inventories falling for the fifth consecutive week, a preliminary Reuters poll showed on Monday.
“The fundamentals haven’t changed at all for oil and some investors may be buying oil automatically in any downturn,” said Edward Moya, senior market analyst at OANDA.
(Reporting by Jessica Jaganathan; Editing by Richard Pullin and Christian Schmollinger)