NEW YORK: Oil prices edged higher on Thursday on growing hopes that the world’s major producers will hold off from a planned supply increase, though an unexpected rise in U.S. crude stockpiles tempered gains.
Brent crude rose 34 cents, or 0.8%, to $44.14 a barrel by 11:22 a.m. EST (1622 GMT), while U.S. West Texas Intermediate (WTI) crude gained 41 cents, or 1%, to $41.86 a barrel.
Prices pared gains after U.S. government data showed crude inventories rose by 4.3 million barrels last week to 488.7 million barrels. Analysts had expected a decrease of 913,000 barrels.
“The headline crude number was a shock because most people were looking for a draw,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “That’s giving the oil market a little weakness.”
Still, both contracts were on track for a fourth consecutive daily rise, lifted by hopes that the COVID-19 pandemic could be brought under control after data showed an experimental vaccine being developed by Pfizer Inc and BioNTech was 90% effective.
However, the International Energy Agency (IEA) said that global oil demand was unlikely to receive a significant boost from the vaccine until well into 2021.
“While the vaccine remains the best news received since the virus spread, life won’t return to normal in a matter of days or weeks,” said Hussein Sayed, chief market strategist at FXTM.
Europe is already grappling with surging infections and new social restrictions, while New York ordered bars and restaurants to close early as U.S. cases hit record levels.
The Organization of the Petroleum Exporting Countries (OPEC) also revised its demand forecast on Wednesday, saying global oil demand will rebound more slowly in 2021 than previously thought because of rising coronavirus cases.
Algeria’s energy minister said OPEC+ – grouping OPEC and allies including Russia – could extend production cuts of 7.7 million barrels per day (bpd) into 2021, or deepen them further if needed.
The weakening outlook has piled pressure on OPEC+ to hold back from a supply increase of 2 million bpd scheduled for January, with the market now pricing in a delay, analysts said.
“We feel OPEC has no choice but to delay output increases; most likely by three months,” analysts at ANZ Research wrote.
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