(Bloomberg) -- Oil surged the most in a week alongside a broader market rally with expectations of additional U.S. stimulus boosting the economy.Futures in London rose as much as 2.4% on Tuesday. U.S. stocks pushed toward all-time highs as Treasury Secretary nominee Janet Yellen called on lawmakers to “act big” on stimulus. A weaker U.S. dollar is also increasing the appeal for raw materials like oil that are priced in the currency.“Yellen has implied there’s going to be stimulus for size and that implies we’re going to have demand creation,” said Bob Yawger, head of the futures division at Mizuho Securities. The expectation of a weaker dollar over the next few weeks “will start to supersize the reflation trade and crude oil is front and center as far as that’s concerned.”The global crude benchmark is still struggling to advance far beyond $55 a barrel, with the near-term trajectory of oil’s demand recovery losing some momentum as governments tighten restrictions to curb the spread of Covid-19. In China, there are government calls for citizens not to travel over the Lunar New Year holidays, while vast swaths of Japan are in a state of emergency and several European nations are still locked down.OPEC Secretary-General Mohammad Barkindo said that while the producer group is cautiously optimistic about a recovery this year, the rebound is fragile. Meanwhile, the International Energy Agency cut its demand outlook for the rest of the year as the virus continues to impede mobility.Still, despite the reduction in the IEA’s demand estimates, global oil stockpiles stand to fall by 100 million barrels in the first quarter and the agency sees much steeper declines in the second half of the year. That comes as traders have been rushing back to the market on expectations of a recovery in global growth later in 2021.“A swift recovery in global mobility could create a substantial oil deficit in 2021 as herd immunity takes hold across a major economies,” Bank of America Global Research said in a report. Still, “with a clear risk of new lockdowns ahead due to the new virus strains and refinery crude demand set to ebb off seasonally, we see limited upside to crude oil prices in the very near-term.”There have also been small pockets of supply outages in recent days. Kazakh oil production fell by about 300,000 barrels a day on Monday due to planned maintenance, while Libyan output slipped over the weekend on pipeline repairs.Brent’s nearest contract is trading at a premium to the following month after settling at a discount on Friday. The spread rallied sharply shortly before activity began in a key North Sea pricing window, in which there was renewed buying interest from Unipec, the trading arm of China’s largest oil refiner. The spread’s current backwardation structure signals growing expectations of supply tightness.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.