(Bloomberg) -- Oil extended gains on more dollar weakness and expectations U.S. President-elect Joe Biden’s incoming administration will take steps to revive growth and energy demand in the world’s largest economy.Futures in New York rose past $53 a barrel after closing up 1.2% on Tuesday. Treasury Secretary nominee Janet Yellen called on lawmakers to “act big” on stimulus, which could provide a boost to consumption while coronavirus vaccines continue to be rolled out. Weakness in the U.S. dollar raises the appeal of commodities like oil that are priced in the currency.The optimism was tempered somewhat as the International Energy Agency cut forecasts for global oil demand amid renewed virus lockdowns, with authorities sealing off part of Beijing. Biden’s cabinet picks also signaled that the new administration would continue some of President Donald Trump’s hard-line policies toward China, which may hamper the energy demand recovery.The IEA’s gloomier outlook is a validation of Saudi Arabia’s decision earlier this month to unilaterally cut production in February and March. That’s helped oil to keep rallying this year, along with a weak dollar and fund flows into commodities as a hedge against a likely acceleration in inflation this year.“Investors are pricing in a very chunky stimulus” in the U.S. that should weaken the dollar, said Stephen Innes, chief global market strategist at Axi. “OPEC+’s current supply discipline coalescing with the Biden administration’s overarching focus on public health and economic response to the Covid-19 pandemic suggests oil prices can go much higher.”The near-term trajectory of oil’s demand recovery has lost some momentum, however. The Chinese government is calling for citizens not to travel over the Lunar New Year holidays, while much of Japan is under a state of emergency and several European nations are still locked down.The IEA cut its demand estimate for this quarter by 600,000 barrels a day in its monthly report. The Paris-based agency trimmed its full-year forecast by 300,000 barrels a day. Global fuel consumption will rise by 5.5 million barrels a day this year after plunging by 8.8 million a day in 2020, it said.Chinese imports of U.S. and Russian crude stayed at similar levels last month from November, while purchases from Saudi Arabia and Iraq fell, according to customs data released Wednesday. Imports from Iran almost doubled.The oil futures curve is reflecting expectations for supplies to tighten. Brent’s prompt timespread is 8 cents a barrel in backwardation, a bullish structure where near-dated prices are more expensive than later-dated ones. It was 7 cents in contango in early January.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.