LONDON: Oil prices rose on Wednesday as the market awaited a pact from producers on output, which many traders expect will continue to be reined in, and Britain’s approval of a COVID-19 vaccine gave hopes for a demand recovery a boost.
Prices were hit earlier by a surprise build in oil inventories in the US and as OPEC and its allies created uncertainty with a two-day delay to a formal meeting to decide whether to increase production in January.
Brent crude oil futures were up 1.9 percent at $48.31 in late afternoon trade in London, while West Texas Intermediate crude was also up about 2 percent to $45.46.
Industry data from the American Petroleum Institute showed US crude inventories rose by 4.1 million barrels last week, compared with analysts’ expectations in a Reuters poll for a draw of 2.4 million barrels.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, a group known as OPEC+, postponed talks on next year’s oil output policy to Thursday from Tuesday, according to sources.
The group this year imposed production cuts of 7.7 million barrels per day (bpd) as the coronavirus pandemic hit fuel demand.
It had been widely expected to roll those reductions over into January-March 2021 amid spikes in COVID-19 cases.
But the UAE said this week that even though it could support a rollover, it would struggle to continue with the same deep output reductions into 2021.
“Energy markets will remain on edge until OPEC+ gets past tomorrow’s meeting. Oil prices should continue to have underlying support as vaccine makers announce start dates for beginning immunizations,” he added.