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Oil rises slightly on hopes for COVID-19 vaccine, declining U.S. crude stocks

Oil prices rose slightly on Wednesday as hopes of an effective COVID-19 vaccine continued to bolster sentiment and an industry report showed U.S. crude inventories fell more than expected.

Brent crude rose 0.16% to $44.53 a barrel, while U.S. West Texas Intermediate (WTI) crude settled up 9 cents, or 0.2%, to $41.45 a barrel. Both benchmarks gained nearly 3% on Tuesday.

“This week’s news about a coronavirus vaccine was encouraging and, alongside short-covering activity, strongly supported oil prices on Monday and Tuesday,” said Giovanni Staunovo, oil analyst for UBS.

The bank cautioned that European lockdowns and restored Libyan oil output could weigh on prices in the short term, but forecast oil at $60 a barrel by the end of 2021 based on the likelihood that producers would continue to rein in supply.

OPEC cuts 2020 oil demand forecast again on rising Covid cases — sees slower recovery next year

OPEC on Wednesday trimmed its global oil demand forecasts for the remainder of this year and 2021, citing a weaker-than-expected economic outlook and a surge in coronavirus cases.

In a closely watched report, the group of oil-producing nations said it now expects world oil demand to contract by around 9.8 million barrels per day year over year in 2020. That reflects a downward revision of 0.3million barrels from last month’s assessment.

For next year, OPEC said oil demand growth will rise by 6.2 million on an annual basis, representing a downward revision of another 0.3 million barrels from its October report. The group has steadily lowered its oil demand outlook for 2021 from an initial expectation of 7 million in July.

The report comes ahead of the group’s Nov. 30 and Dec. 1 meeting with non-OPEC allies to discuss the next phase of oil production policy.

Reference: CNBC