Oil advances after larger-than-expected U.S. crude stockpile draw

Oil pumping jacks, also known as "nodding donkeys", are reflected in a puddle as they operate in an oilfield near Almetyevsk, Russia, on Sunday, Aug. 16, 2020.
Andrey Rudakov | Bloomberg via Getty Images

Oil prices edged higher on Wednesday, buoyed by U.S. government data that showed crude stockpiles fell last week and by optimism about a coronavirus relief package in the United States.

Brent crude futures rose 28 cents to $51.04 a barrel. West Texas Intermediate (WTI) crude futures settled 20 cents, or 0.4%, higher at $47.82 per barrel.

U.S. crude inventories fell by 3.1 million barrels in the week to Dec. 11, the Energy Information Administration said. Analysts had expected a 1.9-million-barrel drop, after stockpiles surged in last week's data.

"We couldn't afford to have a build after last week," said Bob Yawger, director of energy futures at Mizuho. "A U.S. stimulus package seems on the way, which will also be supportive."

U.S. congressional leaders said substantial progress has been made in the months-long standoff on coronavirus relief and a funding bill to avert a government shutdown.

U.S. oil demand is down roughly 13% year-to-date due to the coronavirus pandemic, and Wednesday's figures on retail sales showed a second consecutive month of declining spending due to a resurgence in COVID-19 cases.

Worldwide demand has been poor, with the most notable rebound coming in China. The International Energy Agency (IEA) warned on Tuesday that it will take some time to reverse the collapse in global oil demand during the pandemic.

The IEA revised down its estimates for oil demand this year by 50,000 barrels per day (bpd) and for next year by 170,000 bpd, citing reduced jet fuel use as fewer people travel by air.

In Europe, Germany entered a strict lockdown on Wednesday as the number of registered deaths from COVID-19 jumped by the highest daily increase yet.