Oil prices were down on Wednesday with a surprise increase in US crude stocks, but optimism over a quick recovery with positive developments on the COVID-19 vaccine applications capped further declines.
International benchmark Brent crude was trading at $50.62 per barrel at 0618 GMT for a 0.28% decline after closing Tuesday at $50.76 a barrel.
American benchmark West Texas Intermediate was at $47.45 per barrel at the same time for a 0.36% decrease after it ended the previous session at $47.62 a barrel.
Late Tuesday, the American Petroleum Institute (API) announced its estimate of a rise of nearly 2 million barrels in US crude oil inventories relative to the market expectation of a 3.5 million-barrel fall.
If crude stocks increase in line with the API’s expectations, it signals that crude demand is falling in the US, the world's largest oil consumer, negatively affecting oil prices.
Meanwhile, positive developments in the COVID-19 vaccine applications have prevented further declines. A US Food and Drug Administration (FDA) report said Tuesday that the COVID-19 vaccine made by US biotech firm Moderna is 94.5% efficient, with "no specific safety concerns identified that would preclude” issuance of emergency use authorization (EUA).
The European Medicines Agency (EMA) announced Tuesday that it aims to start COVID-19 vaccinations before the end of 2020. The meeting to issue a decision on the vaccine will be held on Dec. 21, eight days earlier than planned.
However, the International Energy Agency's (IEA) monthly oil report on Tuesday warned that as mass vaccination will take several months, the ensuing impact on oil demand would not be immediate.
“It will be several months before we reach a critical mass of vaccinated, economically active people and thus see an impact on oil demand,” the agency said.
By Ebru Sengul