NEW YORK: Global oil benchmark Brent rose on Wednesday, briefly touching a more than two-month high above $45 a barrel, as hopes of an effective COVID-19 vaccine boosted demand expectations and an industry report showed U.S. crude inventories fell more than expected.
Brent was trading 74 cents, or 1.7%, higher at $44.35 by 11:44 a.m. EST (1644 GMT), after hitting a session peak of $45.30 – the first time it has cleared the $45 threshold since early September.
U.S. West Texas Intermediate (WTI) crude climbed 77 cents, or 1.8% to $42.13.
Both Brent and WTI prices are up about 14% this week after initial trial data showed the experimental COVID-19 vaccine being developed by Pfizer Inc and Germany’s BioNTech was 90% effective.
“The vaccine trade is feeding into the oil market,” said John Kilduff, partner at Again Capital in New York.
The expectation that a vaccine could restore demand for transportation fuels is critical for oil, he said.
“Transportation across the board has been so impacted by the pandemic that getting past it would revive demand for those fuels, which is what the petroleum complex needs.”
Renewed restrictions in Europe and the United States to combat the coronavirus have slowed the fuel demand recovery, offsetting a rebound in Asian economies where consumption has almost returned to pre-COVID levels.
U.S. crude stockpiles last week fell 5.1 million barrels to about 482 million barrels, industry group data showed on Tuesday, compared with expectations for a reduction of 913,000 barrels in a Reuters poll of analysts.
Government data will be issued on Thursday, delayed a day due to the U.S. Veteran’s day holiday on Wednesday.
Further price support came after Algeria’s energy minister said that the Organization of the Petroleum Exporting Countries and allies could extend oil production cuts into 2021, or even deepen them. Saudi Arabia’s energy minister had said on Monday that supply pact could be “tweaked”.
(Additional eporting by Koustav Samanta, Aaron Sheldrick and Noah Browning; Editing by Marguerita Choy; Editing by Edmund Blair and David Goodman)
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