Oil prices firmed on Wednesday as hopes that producer group OPEC and its allies will delay a planned increase in oil output to offset a bigger than expected build in US crude inventories.
“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.
US companies Pfizer and Moderna have raised hopes of containing the COVID-19 pandemic with reports of high success rates for their coronavirus vaccines.
To tackle weaker energy demand as the pandemic continues its second wave, Saudi Arabia has called on fellow members of the OPEC+ group — comprising the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia — to be flexible in responding to oil market needs.
OPEC+ held a meeting on Tuesday that made no formal recommendation ahead of the group’s full ministerial meeting on November 30 and December 1 to discuss policy.
Members of OPEC+ are leaning towards delaying a previously agreed plan to boost output in the new year by 2 million barrels per day (bpd), or 2 percent of global demand, sources told Reuters this week. They are considering options to delay the increase by three or six months.
Both benchmarks were down earlier in the session after the American Petroleum Institute (API) said on Tuesday that US crude stockpiles rose by 4.2 million barrels last week, well above expectations of a build of 1.7 million barrels in a Reuters poll of analysts.
“The dismal crude data was countered by the 5 million barrel drawdown in distillate stocks while gasoline inventories built a tad,” said Tamas Varga of oil brokerage PVM.
Official Energy Information Administration data is due to be released later on Wednesday.