U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Friday after recovering from earlier weakness and were on-track to record their third consecutive weekly rise. The catalyst behind the gains were optimism over successful COVID-19 vaccine trials, while renewed lockdowns in several countries to limit the spread of the virus capped gains. Speculation that OPEC and its allies will keep production in check also helped bolster prices this week.
At 11:26 GMT, January WTI crude oil futures are trading $42.27, up $0.37 or +0.88% and January Brent crude oil futures are at $44.71, up $0.51 and +1.15%. Both benchmarks are up more than 4% this week.
U.S. crude oil and gasoline inventories rose last week, while distillate stockpiles fell sharply even as refinery utilization ramped up, the Energy Information Administration said on Wednesday.
Crude inventories rose by 768,000 barrels in the week to November 13 to 489.5 million barrels, compared with analyst expectations in a Reuters poll for a 1.7 million-barrel rise.
The build was due in part to a bump-up in production to 10.9 million barrels per day from 10.5 million bpd the week earlier. Weekly production figures are volatile, and this week’s move came as offshore facilities restarted after the latest hurricane to hit the U.S. Gulf Coast.
Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. futures rose 1.2 million barrels in the week to 61.6 million barrels, their highest since May, the EIA said.
Distillate stockpiles, which include diesel and heating oil, fell by 5.2 million barrels in the week to 144 million barrels, far exceeding expectations for a 1.5 million-barrel drop, the EIA data showed.
U.S. gasoline stocks rose by 2.6 million barrels, compared with expectations for an 87,000-barrel rise.
Refinery crude runs rose by 394,000 bpd last week, and refinery utilization rates climbed by 2.9 percentage points in the week, the EIA said.
Additionally, prices also found support from expectations the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers – a group known as OPEC+ – will delay a planned production increase.
The group, which meets on November 30 and December 1, is looking at options to delay by at least three months from January the tapering of their 7.7 million barrel per day (bpd) cuts by around 2 million bpd.
A surge in new cases of the coronavirus around the world raised concerns about the outlook for crude demand.
Additionally, concerns about oversupply remain, Libya’s National Oil Corporation (NOC) and France’s Total discussed NOC’s efforts to raise capacity and increase production.
Prices remain rangebound as the euphoria over the announcement of successful vaccine trials seems to be offsetting concerns over the surge in coronavirus cases. This shifts the focus on the widely expected move by OPEC and its allies to curtail its plans to postpone a cut in production. Speculators are pricing in the move, which is why prices have been underpinned this week. Generally speaking, any move that leads to a reduction in supply is considered supportive.
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This article was originally posted on FX Empire