FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub
FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base

December 10, 2020

By Sonali Paul

MELBOURNE (Reuters) – Oil prices rose in early trade on Thursday, buoyed by a COVID-19 vaccine rollout in Britain and the imminent approval of a vaccine in the United States, which could spur a rebound in fuel demand, despite a large build in U.S. crude stocks last week.

U.S. West Texas Intermediate (WTI) crude futures rose 23 cents, or 0.5%, to $45.75 a barrel at 0200 GMT, while Brent crude futures climbed 21 cents, or 0.4%, to $49.07 a barrel. Prices were little changed overnight.

“Optimism over the vaccine prevails and continues to limit any serious downside action,” Axi chief market strategist Stephen Innes said in a note.

Vaccinations could start as soon as this weekend in the United States, with a panel of advisers to meet on Thursday to discuss whether to recommend to the Food and Drug Administration emergency use authorization of the Pfizer/BioNTech vaccine.

Canada approved its first COVID-19 vaccine on Wednesday and said inoculations would start next week.

Oil prices were also supported by some nervousness after two wells at a small oilfield in northern Iraq were set ablaze in what the government called a “terrorist attack”, though production was not affected.

“While the wells were small, it has raised concerns of further disruptions,” ANZ Research said in a note.

Analysts were surprised that the market had shrugged off an unexpectedly large build in U.S. crude stocks in government data released on Wednesday, largely due to a plunge in U.S. crude exports to their lowest since 2018.

Crude inventories rose by 15.2 million barrels in the week to Dec. 4, the Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 1.4 million -barrel drop.

(Reporting by Sonali Paul; Editing by Michael Perry)

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