Oil prices tick up with European shares, trade near 11-month highs

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Oil prices ticked up on Tuesday alongside rising European shares and amid reports of a blast in Saudi Arabia, trading near 11-month highs.

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Brent crude was up 32 cents, or 0.6 percent, at $56.20 by 1433 GMT, while US crude rose 22 cents, or 0.4 percent, to $52.99. Both contracts rose nearly 1 percent on Monday and are set to post the third monthly rise in a row.

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Prices edged up after reports of a blast in the Saudi Arabian capital Riyadh, although the cause remains unclear.

In Europe, gains in financial services and chemical sectors helped stocks rise. Risk assets such a equities and oil often move in tandem.

Raising the prospect of higher oil demand later in the year, the International Monetary Fund predicted global growth of 5.5 percent in 2021, an increase of 0.3 percentage points from the October forecast, citing expectations of a vaccine-powered uptick.

On the supply side, the Organization of the Petroleum Exporting Countries and its allies’ compliance with pledged oil output curbs is averaging 85 percent in January, tanker tracker Petro-Logistics said on Monday, suggesting the group has improved compliance with supply curb commitments.

Also, output from the giant Tengiz field in Kazakhstan, disrupted by a power cut on January 17, will be restored over the next few days, according to Tengizchevroil.

“It appears that market players are cautiously sanguine about the producer group’s market management strategy and therefore about the imminent depletion in global oil inventories,” PVM analysts said.

Dampening bullish sentiment, US Democrats are still trying to convince Republican lawmakers of the need for more stimulus, raising questions over when and in what form a package will be approved.

China is reporting rising COVID-19 cases, casting a pall over demand prospects in the world’s largest energy consumer. Elsewhere, Indian crude oil imports in December rose to their highest in more than two years.