Oil prices rallied higher at the fourth trading session of the week.
The gain was significantly attributed to reports showing the U.K.’s rollout of a COVID-19 vaccine and the imminent arrival of such a COVID-19 vaccine to the United States’ economy, triggering hopes of a recovery in fuel demand and eclipsing a larger-than-expected build in U.S. crude stocks during the previous week.
At the time of writing, Brent crude oil traded around 0.53% to $49.12, while the West Texas Intermediate gained 0.62% to $45.80.
Both oil benchmarks are still trading above the $45 price mark.
Oil prices surprisingly are still rallying higher despite reports from the U.S. Energy Information Administration (EIA) showing a surge of 15.189-million-barrel for the week to December 4, much larger than the 1.424-million-barrel plunge some had earlier anticipated.
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the prevailing circumstances pushing oil prices up. He said:
“Oil traded higher as soon as London came in after reports of an explosion at two oil wells in Iraq. While the field does not produce a critical amount, but any oil facility attach typically makes the market nervous in a knee jerk fashion. Meanwhile, the EIA stock report was a shockingly colossal miss.
“The market had been expecting a small draw in oil inventories. The 15+ million barrels build pushed Oil down in a straight line. Gasoline and distillates were also very weak with both posting builds throughout. In short, higher imports, record declines in exports, and deficient gasoline demand are what caused this surprise.”
Bottom line: Crude oil prices are now priced at the recent trading range, following the supportive outcome of last week’s OPEC+ meeting, positive vaccine news, and an optimistic view of the pace of the global economic recovery.