Oil prices rose on Wednesday as stimulus hopes outweighed the IEA's gloomier outlook for global oil demand. Weakness in the U.S. dollar also raised the appeal of the commodity.
Brent crude for March settlement climbed 0.7 percent to $56.30 a barrel, after having jumped 2.1 percent on Tuesday. West Texas Intermediate for March settlement rose 0.9 percent to $53.48.
Investors anticipate more stimulus spending after U.S. Treasury Secretary nominee Janet Yellen backed major fiscal stimulus to help workers and businesses battered by the coronavirus pandemic.
She urged lawmakers to 'act big" on coronavirus relief spending, arguing that the economic benefits far outweigh the risks of a higher debt burden.
President-elect Joe Biden has already outlined a $1.9 trillion economic relief package last week to jump-start the economy. He is expected to issue a flurry of executive orders following his inauguration at noon.
The optimism was tempered somewhat as a resurge in Covid-19 cases globally has prompted the International Energy Agency (IEA) to cut back its expectations of global oil demand growth for this year.
In its latest oil market report, the Paris-based agency has revised downwards its previous forecast by 600,000 barrels per day for the first quarter of 2021 and by 300,000 bpd for 2021 as a whole.