Oil prices rise on declining U.S. crude stocks, hopes for COVID-19 vaccine

South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S. (Reuters)

SULAIMANI (ESTA) — Oil prices climbed nearly 1% on Wednesday, after an industry report showed U.S. crude inventories have fallen more than expected, while hopes of an effective COVID-19 vaccine continued to bolster sentiment.

Brent crude futures were up 36 cents, or 0.83%, to $43.97 a barrel at 0606, while U.S. West Texas Intermediate crude futures also rose 39 cents, or 0.94%, to $41.75 a barrel.

Crude stockpiles fell by 5.1 million barrels last week to about 482 million barrels, industry group data showed on Tuesday, according to Reuters.

“Defying analysts’ expectations again, the American Petroleum Institute (API) reported on Tuesday a significant ‘draw’ in crude oil inventories,” Reuters cited Stephen Innes, chief market strategist at AXI, as saying.

Oil prices also “continue to revel on the back of Pfizer’s vaccine announcement,” Innes said.

Both Brent and U.S. oil prices are up more than %10 this week since initial trials data showed experimental coronavirus vaccine being developed by Pfizer Inc and Germany’s BioNTech was 90% effective.

Although oil prices are supported by the positive news on vaccine, overall fuel demand outlook remains clouded amid re-imposed COVID-19 restrictions in Europe and United States.

Renewed restrictions in Europe and the United States to combat the COVID-19 have slowed the pace of fuel demand recovery, offsetting a rebound in Asian economies where consumption has almost returned to pre-COVID levels.

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