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Oil Prices Hits March Highs on Vaccine Hopes, Defying Gasoline Stock Spike

CommoditiesNov 25, 2020 03:21PM ET
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© Reuters.

By Barani Krishnan

Investing.com -- Crude stockpiles in the United States fell by almost 800,000 barrels last week, confounding analysts expectations for a build and sending benchmark U.S. oil to $45 highs last seen in March before the market upheavals caused by the coronavirus pandemic.

Inventories of crude for the week ended Nov. 20 slid by 754,000 barrels, compared to the build of 127,000 barrels projected by analysts, weekly data issued by the Energy Information Administration showed. The decline almost negated the stockpile rise of 768,000 barrels in the prior week.

While crude inventories fell, gasoline stockpiles rose by 2.18 million barrels, more than thrice the expected build of 614,000 barrels. It was a second straight week that the market had got its reading on gasoline wrong, after the previous week’s rise of 2.6 million against a projected decline of 2.3 million.

Gasoline is the foremost indicator of fuel demand in the United States. Flagging numbers for this oil component over the past two weeks are proof of the seasonal demand decline at this time of the year, right after the end of the peak U.S. summer driving period. It’s also testimony of the continued weight of the Covid-19 pandemic on the economy, especially with the burst of new infections, hospitalizations and deaths since the start of November.

The bearish streak in gasoline demand, however, did not stop West Texas Intermediate crude, the benchmark for U.S. oil, from reaching 8-month highs.

WTI’s front-month settled up 80 cents, or 1.8%, at $45.71 per barrel. It earlier reached an intraday peak of $45.74, a level previously seen on March 5, right before the economic collapse brought on by the COVID-19 sent WTI to minus $40 per barrel at one point.

WTI aside, London-traded Brent, the global benchmark for crude, settled up 67 cents, or 1.4%, at $48.53. Brent earlier reached $48.91, also its highest since March.

Oil prices have been on a tear lately, with WTI and Brent both rising about $11 per barrel, or nearly 30%, over the past five weeks. The rally has come on the back of promising coronavirus vaccine trials, even as a rash of new COVID-19 infections are reported across a nation with 12.6 million positive cases since January and almost 260,000 fatalities related to that. US COVID-19 hospitalizations have hit daily record highs of above 100,000 in recent weeks, with New York reporting 5,000 cases on Wednesday, the first such statistic since April.

“It seems energy traders are riding coronavirus vaccine headlines that are forcing everyone to raise their crude demand outlook forecasts for 2021,” despite a wrath of U.S. data that suggests that fourth quarter GDP could see a return to contraction, said Ed Moya, analyst at New York’s OANDA. “Commodity prices should benefit from a weaker dollar since this wave of U.S data supports the notion that the Fed will do more and eventually Congress too.”

Wednesday’s run-up in crude prices also seemed underpinned by another inventory data that had been improving of late: diesel, which powers the trucks that form the backbone of the country’s delivery system that had become all the more important due to the century’s worst pandemic ever.

Stockpiles of diesel-led distillates fell by 1.4 million barrels after a 5.2 million decline the previous week, EIA data showed.

Oil Prices Hits March Highs on Vaccine Hopes, Defying Gasoline Stock Spike
 

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Comments (6)
Jan Skilbrei
Jan Skilbrei Nov 25, 2020 12:52PM ET
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its important remember poor children in Yemen not get medicine, the rich Sirs sit on (often stolen) royalties, while good people deveived into not asking them help, instead ha rass the intwelligent good harted people
greg mason
greg mason Nov 25, 2020 12:52PM ET
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there is no vaccine for children yet, what does that tell you about Government strategy , tells me they are self centered and don't care about the future
Jo Tay
Jo Tay Nov 25, 2020 12:52PM ET
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There's no vaccine for anyone yet, so this argument doesn't make sense, even more so as the article is about oil prices
Hedge Fund
Hedge Fund Nov 25, 2020 12:42PM ET
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this is why I trade bitcoin and litecoin.look at the profit from last year oil is impossible.spot gold never follows miners..oil and all precious metals are rigged and if your not on the inside your just gambling..get a coinbase pro account and buy BTC&LTC..I retired from day trading and made more in 2 years trading crypto than 2 years day trading ETFs
Water Bender
Water Bender Nov 25, 2020 12:22PM ET
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🤔
Ridha B younes
Ridha B younes Nov 25, 2020 12:18PM ET
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the oil rig is rigged
Ridha B younes
Ridha B younes Nov 25, 2020 12:18PM ET
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oil rigatoni
Tony Coll
Tony Coll Nov 25, 2020 11:37AM ET
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How is it possible that the API and EIA data are always opposite when they look at the same information??
Jesse Mulliniks
Jesse Mulliniks Nov 25, 2020 10:59AM ET
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Abysmal data
Hedge Fund
Hedge Fund Nov 25, 2020 10:59AM ET
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nobody is driving w covid19..there will be a glut again..watch..in meantime.buy litcoine on coinbase and thank me when it hits $90-$100+ this year end
Allen Drewe
Allen Drewe Nov 25, 2020 10:59AM ET
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Hedge Fund all you have to do is look outside to see youre wrong
 
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