Oil rose for a fourth straight day on Wednesday, shrugging off an industry report showing a higher-than-unexpected rise in U.S. crude stockpiles and extending a rally driven by hopes that a COVID-19 vaccine will boost fuel demand.
West Texas Intermediate crude gained 65 cents, or 1.4%, to $45.40 a barrel. Brent crude was up 48 cents, or 0.95%, at $48.28 a barrel.
Both contracts are at their highest since early March and have rallied nearly 10% in the last four days.
“The broader market is in de-risk mode as we now have three effective vaccines that can combat the virus,” said Kevin Solomon, energy economic analyst at StoneX.
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 Export 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.
“The alleviation of risk also comes from the political situation in the United States, where President Trump granted his administration with permission to begin the transfer of power to President-elect Joe Biden,” Solomon said.
The American Petroleum Institute, 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.
Official U.S. government crude inventory data will be released later on Wednesday. 29dk2902l