Oil Rises As US Vaccine Progress Raises Demand Expectations By Reuters

By Shu Zhang

SINGAPORE (Reuters) – Oil prices rose on Wednesday as signs of progress in launching the COVID-19 vaccine in the United States, the world’s largest consumer, raised expectations for demand.

US West Texas Intermediate (WTI) crude futures rose 15 cents, or 0.25%, to $ 59.90 a barrel at 0757 GMT, recovering from three days of losses.

futures rose 24 cents, or 0.38%, to $ 62.94 a barrel after four days of losses.

“Ongoing stimulus measures, as COVID-19 vaccines accelerate, have boosted confidence,” ANZ analysts wrote in a note.

The United States will have enough COVID-19 vaccine for every American adult by the end of May, President Joe Biden said Tuesday after Merck & Co agreed to inoculate rival Johnson & Johnson (NYSE :).

Futures fell earlier in the day amid uncertainty about the amount of supply that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together called OPEC +, will restore to the market at their meeting Thursday and a large buildup. of inventories.

Thursday’s OPEC + meeting comes at a time when producers are generally positive about the oil market outlook compared to a year ago, when they cut supply to boost prices.

The market widely expects OPEC + to ease production cuts, which were the deepest in history, by around 1.5 million barrels per day (bpd), and that OPEC leader Saudi Arabia will put end its voluntary production cut of 1 million bpd.

Still, an OPEC + technical committee document reviewed by Reuters called for “cautious optimism,” citing “underlying uncertainties in physical markets and macro sentiment, including risks of COVID-19 mutations that are still rising. “.

Reinforcing concerns of a possible oversupply, the American Petroleum Institute industry group reported that US crude stocks rose by 7.4 million barrels in the week through February 26, in stark contrast to estimates from the US Petroleum Institute. analysts of an extraction of 928,000 barrels. [API/S]

However, that construction occurred while US refining capacity was shut down during the survey week due to cold weather in Texas. Refinery operations fell 1.75 million bpd, API data showed.

“The recent selloff may help bolster Saudi Arabia’s cautious stance and delay any production increases,” said Stephen Innes, Axi’s global market strategist.

“It’s probably something that could see OPEC + ramp up more towards 500,000 bpd instead of 1.5 million bpd,” he said.