Oil rose for the fourth straight session on Wednesday as the market shrugged off an industry report showing U.S. crude stockpiles rose more than expected, extending a rally driven by hopes that a COVID-19 vaccine will boost fuel demand.
Brent crude was up 44 cents, or 0.9%, at $48.30 a barrel by 0743 GMT, having risen almost 4% in the previous session. West Texas Intermediate crude gained 33 cents, or 0.7%, to $45.24, after rising more than 4% on Tuesday.
Both contracts are at their highest since early March and have rallied around 9% in the last four days.
“With an orderly Presidential transition in sight, vaccine boosters and expectations that OPEC+ will extend production cuts next week, oil markets completely ignored the unexpected 3.8 million-barrel climb in API U.S. crude inventories,” said Jeffrey Halley, senior market analyst at OANDA.
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 after positive results from other major pharmaceutical developers.
However, any viable vaccine is not likely to be ready for mass use in the next few months, meaning lockdowns and travel restrictions will be in place into next year.
That makes it likely that OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, will continue production cuts into 2021 after a meeting set to start on Nov. 30 following technical talks this week.
OPEC+ producers have been withholding supplies to support prices after pandemic lockdowns earlier this year caused an evaporation in demand.
They are currently due to increase production by 2 million barrels per day — about 2% of global demand before the pandemic — from January.
In the United States, President Donald Trump’s administration gave President-elect Joe Biden access to resources enabling him to take over in January after an extended delay despite Trump’s loss in the Nov. 3 election.
The American Petroleum Institute (API), an industry association, said on Tuesday that U.S. crude stocks rose by 3.8 million barrels in the week to Nov. 20 to around 490 million barrels, against analysts’ expectations in a Reuters poll for a build of 127,000 barrels. [API/S]
Official U.S. government crude inventory data will be released later on Wednesday. [EIA/S]
Editing by Kim Coghill and Jacqueline Wong