By Adedapo Adesanya
The price of Brent crude oil reached $50 a barrel for the first time since March as strong demand out of Asia and optimism surrounding COVID-19 vaccine progress lifted the outlook for consumption.
This pushed the price of the international benchmark higher by 2.99 per cent or $1.46 to $50.32 per barrel and lifted the United States’ futures, West Texas Intermediate (WTI) crude, by 2.94 per cent or $1.34 to $46.86 per barrel.
In the US, an all-day regulatory meeting was held on Thursday to determine the next step toward the likely authorization of the first COVID-19 vaccine. The vaccine, developed by Pfizer Inc. and BioNTech, saw its rollout in the United Kingdom begin earlier this week after regulators in that country authorized it for emergency use.
Canada on Wednesday approved its first vaccine and said initial shots would be delivered starting next week.
It was not just in Asia where demand is recovering. There are also some bright spots in Europe as well. The UK, which emerged from a second lockdown this month, saw road fuel sales jump by almost 10 per cent last week. It was also recorded that fuel use in Brazil has surpassed pre-virus levels.
The bullish outcome of the commodity shrugged off the latest weekly report on US oil inventories which showed a massive 15.2 million barrel rise in crude stocks. Analysts had expected a 1.4 million barrel drop.
It was the second-largest crude inventory build on record, after a 19+ million barrel build earlier this year, in April, according to EIA data.
Oil prices often react negatively to major crude builds, especially when inventories are already high. But due to the positive vaccine news, oil prices found a better landing.
Any positive developments on the vaccine front are expected to lift oil prices.
Another contributing factor to the rising prices was the attacks on two oil wells in the Khabbaz oilfield in Iraq, although the two wells combined produced less than 2,000 barrels per day prior to the attack.
Oil has recovered from historic lows reached in April when the pandemic hammered demand, helped by a record supply-cut deal by the Organisation of the Petroleum Exporting Countries and allies (OPEC+).
OPEC+ will further ease its supply restrictions in January by adding an extra 500,000 barrels per day although the easing is more gradual than previously agreed, to provide additional support to the market.
Dipo Olowookere