Oil extends gains on vaccine hopes
Oil prices climbed to the highest in more than eight months on Wednesday, after data showed a surprise drop in US crude inventories last week, extending a rally driven by hopes that a Covid-19 vaccine will boost fuel demand.
Brent crude rose $0.31, or 0.7%, at $48.17 a barrel adding to a 4% gain the previous session. US West Texas Intermediate crude gained $0.41, or 0.9%, to $45.32, after rising more than 4% on Tuesday.
Both benchmarks rose for a fourth straight session, to the highest since early March.
US crude inventories fell by 754,000 barrels last week, data from the US Energy Information Administration showed, compared with analysts’ expectations in a Reuters poll for a 127,000-barrel rise. Inventories at Cushing, Oklahoma, the delivery point for WTI, fell by 1.7 million barrels.
“There was a decent drawdown at Cushing, so that’s supportive. It was probably the most bullish aspect of this report,” John Kilduff, partner at Again Capital LLC in New York. Still, price gains were capped due to lingering concerns over oil demand.
US weekly gasoline demand last week dropped by about 128,000 barrels per day (bpd) to 8.13 million bpd, the lowest since June 2020.
AstraZeneca said on Monday its Covid-19 vaccine could be up to 90% effective, providing another weapon in the fight to control the pandemic.
“Crude oil prices are trading at their highest levels since early March, supported by positive market sentiment as a result of vaccine news and strong oil demand in Asia,” said UBS oil analyst Giovanni Staunovo.
Published in The Express Tribune, November 26th, 2020.
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