WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange advanced in early trade Tuesday as the U.S. dollar weakened and equities charged higher as investors assessed prospects of deeper fiscal stimulus in the United States that is expected to invigorate a faltering economy, offsetting concern of new variants of coronavirus and slower-than-expected vaccination programs domestically and elsewhere that has hobbled a recovery in oil demand.
On Thursday, U.S. President-elect Joe Biden is expected to announce his plan for a trillion-dollar relief package, which could include a generous $2,000 stimulus check for millions of American households, broad funding for vaccination programs, and an increase in the federal minimum wage to $15 an hour. Markets appear to welcome deeper public spending by the federal government as consumer spending slowed sharply in recent months and employers accelerated layoffs.
U.S. retail sales for December set for release Friday will offer more insight into severity of a broad economic slowdown at the end of 2020. Consensus calls for consumer spending to fall 0.1% in December after declining a steeper than expected 1.1% in the month prior. If realized that would be the third consecutive month of declines.
U.S. job growth turned negative in the final month of 2020, according to the Department of Labor, with employers cutting 140,000 jobs -- the first contraction since April.
Further stoking demand fears, United States might be battling its own variant of coronavirus that is responsible for the surge in new infections, suggested the White House coronavirus task force. New daily cases climbed to 220,887 on Monday, according to Centers for Disease Control and Prevention, lifting the death count to 373,167.
There have been some alarming signs of pandemic's rapid spread in Asia, with Chinese authorities introducing new curbs in areas surrounding Beijing and Japan is to widen a state of emergency beyond Tokyo.
Domestically, analysts are calling for U.S. commercial crude stocks to have declined for a fifth consecutive week through Jan. 8, with inventories expected to fall by 3.8 million per barrel (bbl) to around 481.7 million bbl, which would be the lowest stock level since late March.
American Petroleum Institute and the U.S. Energy Information Administration will release inventory reports for the first week of January later Tuesday and Wednesday morning, respectively.
Later Tuesday, EIA will also publish its monthly Short-term Energy Outlook on tap for release at 12 p.m. ET.
Near 7:30 a.m. ET, U.S. dollar traded near three-week high 90.600 against a basket of foreign currencies after falling to a 32-month low 89.165 on Jan. 6. NYMEX West Texas Intermediate for February delivery advanced 73 cents to $52.98 bbl and the March Brent contract on ICE climbed 80 cents to $56.46 bbl. NYMEX February ULSD futures added 2 cents to $1.5935 gallon, with the front-month RBOB contract gaining 2.26 cents to $1.5434 gallon.
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