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COMMODITIES: Oil Rises as Senate Supports U.S. Pandemic Relief Amid Squeezed Supply

· 02/05/2021 03:58

08:46 AM EST, 02/05/2021 (MT Newswires) -- Oil traded higher early on Friday, rising to fresh year highs after the U.S. Senate took initial steps to pass the Biden Administration's US$1.9 trillion economic-relief package, promising rising demand as supply remains tight.

West Texas Intermediate crude for March delivery was last seen up US$0.46 to US$56.69 per barrel, while April Brent crude, the global benchmark, was up US$0.54 to US$59.38.

The rise comes as the U.S. Senate narrowly passed budget measures early on Friday morning in support of the relief package, though a final passage of the legislation to offer one-time payments to needy citizens and other supports is weeks away. The stimulus is expected to support flagging demand for oil.

The passage of the measures comes as Asian demand for oil remains solid, while the OPEC+ group continues to restrict supply while vaccination programs promise an end to the pandemic, supporting prices that have climbed to the highest since January, 2020.

"The sharp rise in prices since the beginning of the year is based on positive market sentiment, hopes of an upcoming end to the pandemic and further economic stimulus, the associated expectation of a strong recovery in oil demand, and a currently severely restricted oil supply," Commerzbank analyst Carsten Fritsch said in a report.