Oil climbs as US prepares to roll out Covid-19 vaccine

Melbourne — Oil prices rose in early trade on Thursday, buoyed by a Covid-19 vaccine rollout in Britain and the imminent approval of a vaccine in the US, which could spur a rebound in fuel demand, despite a large build in US crude stocks last week.

US West Texas Intermediate crude futures rose 23 US cents, or 0.5%, to $45.75 a barrel at 2am GMT, while Brent crude futures climbed 21c, or 0.4%, to $49.07 a barrel. Prices were little changed overnight.

“Optimism over the vaccine prevails and continues to limit any serious downside action,” Axi chief market strategist Stephen Innes said in a note.

Vaccinations could start as soon as this weekend in the US, with a panel of advisers to meet on Thursday to discuss whether to recommend to the Food and Drug Administration emergency-use authorisation of the Pfizer/BioNTech vaccine.

Canada approved the use of the Pfizer/BioNTech Covid-19 vaccine on Wednesday and said inoculations would start next week.

Oil prices were also supported by some nervousness after two wells at a small oilfield in northern Iraq were set ablaze in what the government called a “terrorist attack”, though production was not affected.

“While the wells were small, it has raised concerns of further disruptions,” ANZ Research said in a note.

Analysts were surprised that the market had shrugged off an unexpectedly large build in US crude stocks in government data released on Wednesday, largely due to a plunge in US crude exports to their lowest since 2018.

Crude inventories rose by 15.2-million barrels in the week to December 4, the Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 1.4-million-barrel drop.

Reuters