On Wednesday, oil prices rose to the highest level since early March following the unexpected fall in the US crude inventories and optimism about coronavirus vaccines.
Brent crude oil futures climbed by 1.6% or 75 cents to settle at USD48.61/barrel while the US WTI jumped by 1.8% or 80 cents to USD45.7/barrel. Both rose for the fourth session in a row.
According to the government data, US crude stockpiles slumped by 754,000 barrels in the week ended November 20. Analysts only estimated a 127,000 barrel rise. Likewise, inventory at the WTI delivery point Cushing, Oklahoma, dropped by 1.7 million barrels.
Astra Zeneca’s claim on Monday that its coronavirus vaccine could be up to 90% effective also supported prices.
Other than that, the recent depreciation of the US Dollar has also impacted the prices as it has helped to tame the impact of the surging oil prices for some of the world’s biggest energy consumers.
Moreover, the market is increasingly believing that the Organization of Petroleum Exporting Countries and its non-member producer allies (OPEC+) will extend its current oil output cut by 7.7 million bpd for the first quarter of 2021.
Nonetheless, demand worries still put a hold on price gains as the US weekly gasoline demand hit the lowest level since June 2020. It slipped by around 128,000 bpd to 8.13 million bpd.
At the moment, Brent has entered a backwardation stage which would boost the drawdown of inventories and indicates the decreasing fears of a glut. Brent futures for February delivery traded as much as 14 cents higher than the January contract, the highest since July, before settling at an 8 cent premium.
