Oil prices rose early on Tuesday as equity markets rallied on hopes that the U.S. is close to announcing another stimulus package to support the economy in response to the pandemic-driven slump.
As of 10:13 a.m. EDT on Tuesday, WTI Crude was up 1.17 percent at $42.47 and Brent Crude was rising 0.73 percent to $45.34.
Analysts believe that if Congress soon reaches some kind of a deal on a stimulus package, it would boost oil prices in the short term.
On Monday, U.S. President Donald Trump said that his administration is "looking very seriously" at a capital gains tax cut in the hope of creating jobs, as well as an income tax cut for middle-income families.
Apart from hopes of stimulus to bolster the world's largest economy, oil prices rose on hopes that demand recovery, at least in Asia, continues.
Over the weekend, Amin Nasser, chief executive at the world's biggest oil-producing and oil-exporting company, state oil giant Saudi Aramco, said that the company was optimistic about the pace of oil demand recovery in Asia. Demand for crude oil in Asia has almost returned to the levels from before the pandemic, Aramco's Nasser said.
On Monday, data from China showed that the factory deflation slowed down last month due to higher oil prices and industrial activity on track to reach pre-crisis levels soon. The Chinese data added substance to hopes of a continued recovery in the world's second-largest economy, which is also the world's top crude oil importer.
On Tuesday, data out of Germany - Europe's largest economy - also instilled hopes of recovery, as the ZEW survey of investor sentiment showed the economic sentiment improved in August more than analysts had anticipated.
Later on Tuesday, the catalyst for oil prices will be the weekly inventory estimate of the American Petroleum Institute (API).
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More