Oil prices rise, touch 9-month high on U.S. stimulus progress

An aerial view of a crude oil storage facility is seen on May 5, 2020 in Cushing, Oklahoma.
JOHANNES EISELE | AFP via Getty Images

Oil climbed on Thursday and touched a nine-month high, with traders optimistic about progress toward a U.S. fiscal stimulus deal and strong Asian demand.

Record-breaking refining demand in China and India lent further strength to the market.

U.S. lawmakers edged closer to agreement on a $900 billion virus-relief spending package on Wednesday.

The U.S. dollar set a 2-1/2 year low against major rivals on Thursday which also helped oil because crude priced in the greenback becomes cheaper for buyers holding other currencies.

Brent crude futures were up 34 cents at $51.42 a barrel, and touched a session high of $51.90.

U.S. West Texas Intermediate crude futures rose by 45 cents to $48.27 a barrel, with a session high of $48.59. Both benchmarks hit their highest since early March.

"Asia was ahead of the curve in recovery mode from the Coronavirus," said Phil Flynn, senior analyst at Price Futures in Chicago. "Looking at what we're seeing in Asia is raising expectations that in the New Year we will see a rapid increase in crude oil demand, as the vaccine rolls out in the U.S.," he said.

The United States on Thursday expanded its campaign to deliver COVID-19 vaccine shots.

U.S. crude inventories fell by 3.1 million barrels in the week to Dec. 11, the Energy Information Administration said, far more than analysts' expectations of a 1.9-million-barrel drop.

"It seems to be a much better festive season than most bullish traders could expect for. But whether oil prices can remain as high and keep these gains is still questionable amid the demand destruction lockdowns are causing," said Bjornar Tonhaugen at Rystad Energy.