Oil hits highest since March on vaccine

Oil hits highest since March on vaccine

Earlier in the week, the EIA reported a drop of around 750K barrels in U.S. crude oil supplies during last week, in line with the decrease in oil inventories reported late on Tuesday by the API.

But gasoline demand for the week fell by 128,000 barrels per day (bpd) to 8.13 million bpd, the lowest since June.

The bank sees a coordinated move to restrict output as the best near-term action for oil prices, given the high levels of crude inventories, Libya's production recovery, and a new wave of coronavirus infections leading to renewed partial lockdowns.

Still, demand worries capped price gains as USA weekly gasoline demand dropped by about 128,000 barrels per day (bpd) to 8.13 million bpd, the lowest since June 2020. The drawdown is set to continue with the contango in the oil curve shrinking to levels that make storing crude uneconomic.

United States crude oil inventories likely edged lower last week, while distillate stockpiles were seen decreasing for a 10th straight week, a preliminary Reuters poll showed on Monday, ahead of reports from the American Petroleum Institute and the Energy Information Administration (EIA). West Texas Intermediate crude gained 24 cents, or 0.5%, to $45.15, after rising more than 4% on Tuesday.

"Progress on developing and distributing a vaccine de-risks the path back to normal for oil markets", said Stephen Innes, chief global markets strategist at financial services firm Axi.

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

U.S. President-elect Joe Biden has urged people to forgo big family gatherings, wear protective masks and maintain social distancing for the Thanksgiving holiday in the face of the surging coronavirus pandemic.

Oil Futures trading at GMT 06.37; Brent: $+0.32 WTI: $+0.25. The condition, where prices for nearby contracts are lower than those further in the future, typically prompts traders to hold on to unneeded oil.

Related Articles