By Adedapo Adesanya
Crude oil prices continued their bullish run on Wednesday, November 25 after the Energy Information Administration (EIA) reported a crude oil inventory draw of 800,000 barrels for last week.
Previously, the price had risen to its highest levels for the first time since March as a third promising Coronavirus vaccine raised hope for fuel demand recovery.
However, at the midweek, the global benchmark crude gained 91 cents or 1.9 per cent to sell at $48.77 per barrel while the United States’ West Texas Intermediate (WTI) crude went up by 90 cents or 2.0 per cent to trade at $45.81 per barrel.
The American Petroleum Institute (API) earlier reported an inventory build of 3.8 million barrels for the period. Analysts had expected the EIA to report a modest 127,000 barrels build in inventories. A week earlier, the EIA estimated a crude oil stock draw of 800,000 barrels as well.
Traders have shunned warnings about the early nature of the positive efficacy and safety results reported by pharma companies, betting big on a quick rebound in oil demand thanks to mass vaccinations.
The University of Oxford and AstraZeneca’s interim trial data from their Phase III trials showed that their vaccine is 90 per cent effective at preventing COVID-19 and offers a high level of protection.
This was the third positive vaccine news for the past three weeks, after the announcements from Pfizer and Moderna, which were around 95 per cent effective. These vaccinations are still in the future, however, which puts the rally on shaky foundations.
In addition, the market was boosted by a pending decision by OPEC+, made up of the Organisation of the Petroleum Exporting Countries (OPEC) and allies led by Russia, to extend the current production cuts of 7.7 million barrels per day into next year, even though internal divisions within OPEC have caused some worry.
Although all members of the cartel need oil prices much higher, a few are eager to continue cutting oil production, which is vital for their economies.
OPEC+ is leaning towards delaying next year’s planned increase in output despite a rise in prices, three sources close to OPEC+ said.
The group is expected to roll over current cut levels into 2021 when members meet November 30 to December 1, following technical talks this week.
A weaker dollar also supported crude prices as a lower greenback makes oil less expensive for buyers holding other currencies.
