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Oil climbs for the fifth day

Category: Economy

Date: 2020-11-26T06:34:53+0000
Oil climbs for the fifth day

Shafaq News/ Oil prices climbed for the fifth consecutive day, as data showing a surprise drop in weekly U.S. crude inventories extended a rally driven by hopes that a COVID-19 vaccine will boost fuel demand.

Brent crude rose 31cents, or 0.64%, to settle at $48.84 a barrel.

U.S. West Texas Intermediate crude also closed at its highest since early March, rising 24 cents, or 0.55%, to $45.96.

Both benchmarks gained 9% this week.

U.S. crude inventories fell by 754,000 barrels last week, government data showed, surprising analysts who in a Reuters poll had predicted a 127,000-barrel rise. Inventories at Cushing, Oklahoma, the delivery point for WTI, fell by 1.7 million barrels.

“There was a decent drawdown at Cushing, so that’s supportive. It was probably the most bullish aspect of this report,” John Kilduff, partner at Again Capital LLC in New York.

Still, demand worries capped price gains as U.S. weekly gasoline demand dropped by about 128,000 barrels per day (bpd) to 8.13 million bpd, the lowest since June 2020.

On Monday, investor hopes got a boost as AstraZeneca said its COVID-19 vaccine could be up to 90% effective.

“Crude oil prices are trading at their highest levels since early March, supported by positive market sentiment as a result of vaccine news and strong oil demand in Asia,” said UBS oil analyst Giovanni Staunovo.

“We maintain our bullish outlook for next year and target Brent to hit $60 per barrel at the end of 2021,” he added.

A weaker dollar also supported crude prices, making greenback-denominated oil less expensive for buyers holding other currencies.

“Positive vaccine news and swift deployment views are behind a significant part of this move in the curve, supported by increasingly firm beliefs by the market that OPEC+ will extend its current output targets for Q1 2021,” said Rystad Energy’s analyst Bjornar Tonhaugen.

OPEC+, made up of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, is leaning towards delaying next year’s planned increase in output despite a rise in prices, three sources close to OPEC+ said.

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