Oil prices firmed by about 2% on Wednesday on hopes OPEC and its allies will delay a planned increase in oil output and after Pfizer said its COVID-19 vaccine was more effective than previously reported.
The market was also supported by a smaller-than-expected increase in U.S. crude stockpiles last week.
Brent crude rose 90 cents, or 2.1%, to $44.65 a barrel by 1:58 p.m. ET (1858 GMT,) while U.S. West Texas Intermediate crudegained 68 cents, or 1.6%, to $42.11.
Both contracts jumped by about $1 after Pfizer Inc. Pfizer Inc. said that final results from late-stage trial of its vaccine showed it was 95% effective. Last week it had put the efficacy at more than 90%.
Moderna Inc Moderna Inc on Monday said that preliminary data for its vaccine also showed it was almost 95% effective.
“Oil prices today are modestly rising on hopes that OPEC+ will decide to postpone its planned production increase in January and on the latest vaccine euphoria,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.
To tackle weaker energy demand amid a second wave of the pandemic, Saudi Arabia called on fellow members of the OPEC+ group to be flexible to meet market needs and to be ready to adjust their agreement on output cuts.
OPEC+, comprising the Organization of the Petroleum Exporting Countries, Russia and other producers, met on Tuesday but made no formal recommendation. The group is due to discuss policy at a full ministerial meeting to be held on Nov. 30 and Dec. 1.
Members of OPEC+ are leaning towards delaying the current plan to boost output in January by 2 million barrels per day (bpd), sources have said. They are considering a possible delay of three or six months.
In the United States, crude inventories rose 768,000 barrels last week, compared with analyst expectations in a Reuters poll for a 1.7 million-barrel rise. Distillate stockpiles, which include diesel and heating oil, fell by 5.2 million barrels, far exceeding expectations.
The build was due in part to a 400,000-barrel hike in production to 10.9 million bpd last week.
“Between the U.S. and Libya, nearly 2 million bpd of crude oil have been added to the global supply chain in recent weeks,” said Bob Yawger, director of energy market futures at Mizuho.
“Last time U.S. production was on the rise, OPEC ultimately decided to open the spigots, and the resulting price war sent WTI to negative pricing for the first time ever. I doubt that will happen again. But I am sure the Russia and the Saudis are not happy.”
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