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Oil shrugs off inventory gain amid sustained vaccine rally

Published : Thursday, 26 November, 2020 at 12:00 AM  Count : 91

TOKYO, Nov 25: Oil rose for the fourth straight session on Wednesday as the market shrugged off an industry report showing US 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 0.9per cent, at $48.30 a barrel by 0743 GMT, having risen almost 4per cent in the previous session. West Texas Intermediate crude gained 33 cents, or 0.7per cent, to $45.24, after rising more than 4per cent on Tuesday. Both contracts are at their highest since early March and have rallied around 9per cent 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 US crude inventories," said Jeffrey Halley, senior market analyst at OANDA.
AstraZeneca said on Monday its COVID-19 vaccine was 70per cent effective in trials and could be up to 90per cent 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 2per cent 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 US 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.    -Reuters

Official US government crude inventory data will be released later on Wednesday.

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