Oil shrugs off U.S. inventory gain amid sustained vaccine rally

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In this news, we discuss the Oil shrugs off U.S. inventory gain amid sustained vaccine rally.

LONDON (Reuters) – Oil rose for a fourth straight session on Wednesday as the market ignored an industry report showing U.S. crude inventories rose more than expected, prolonging a rally driven by hopes that a COVID-19 vaccine will boost fuel demand.

Brent was up 53 cents, or 1.1%, at $ 48.39 a barrel at 9:56 a.m. GMT, after rising nearly 4% in the previous session.

West Texas Intermediate crude gained 38 cents, or 0.8%, to $ 45.29, after rising more than 4% on Tuesday.

“Crude oil prices are trading at their highest level since early March, supported by positive market sentiment due to vaccine news and strong demand for oil in Asia,” said Giovanni Staunovo, petroleum analyst at UBS.

“We maintain our bullish outlook for next year and aim for Brent to hit $ 60 per barrel by the end of 2021,” he added.

AstraZeneca said on Monday that its COVID-19 vaccine was 70% effective in trials and could be up to 90% effective, providing another weapon in the fight against the pandemic.

The official start of US President-elect Joe Biden’s transition to the White House has also improved the global outlook.

A weak dollar has also supported crude prices, as a lower dollar makes oil cheaper for buyers.

“The recent depreciation of the US dollar has helped soften the impact of soaring oil prices on some of the world’s largest energy consumers,” said Stephen Brennock, broker PVM.

The market appeared to ignore the latest data from the American Petroleum Institute (API) on Tuesday which showed U.S. crude inventories had risen 3.8 million barrels in the week to Nov. 20 to about 490 million barrels. [API/S]

Official data on U.S. government crude inventories will be released later Wednesday. [EIA/S]

Analysts have also said that a viable vaccine is unlikely to be ready for mass use in the next few months, meaning lockdowns and travel restrictions will be in place next year.

It is therefore likely that OPEC +, made up of the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, will continue production cuts until 2021 after a meeting that will begin on November 30 in following technical discussions this week.

OPEC + producers have suspended supplies to support prices after pandemic lockdowns earlier this year caused demand to evaporate.

They are currently expected to increase production by 2 million barrels per day – about 2% of global demand before the pandemic – from January.

Reporting by Bozorgmehr Sharafedin in London, additional reporting by Aaron Sheldrick in Tokyo. Edited by Jane Merriman

Original © Thomson Reuters

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