Oil prices have increased amid hopes that the new US administration would announce a stimulus package that would boost fuel demand.

Brent crude rose by $0.35, or 0.6%, to reach $56.25 a barrel while US West Texas Intermediate (WTI) crude futures increased by $0.37, or 0.7%, to reach $53.35 a barrel, reported Reuters.

US Treasury Secretary nominee Janet Yellen has urged lawmakers to ‘act big’ on relief spending amid the Covid-19 pandemic to fuel economic growth.

National Australia Bank commodity research head Lachlan Shaw was cited by the news agency as saying: “Certainly the expectation is that will support better growth and better demand in the US.”

However, concerns are being raised about near-term oil demand as the International Energy Agency reduced its outlook for first-quarter oil demand by 580,000bpd,  Reuters reported.

This is due to lockdowns and border closures to contain Covid-19 infections.

China’s capital Beijing has announced stricter Covid-19 control measures, including plans to shut down a subway station due to a surge in positive cases while Germany extended its ongoing lockdown until 14 February, according to the news agency.

The US crude and products inventory data due will be monitored by traders from the American Petroleum Institute on 20 January and the Energy Information Administration on 22 January.