By Adam Claringbull
Investing.com – Oil was up on Wednesday morning in Asia, with gains of over 11% in the last two days. Prices have been buoyed by positive COVID-19 vaccine news and encouraging U.S. stockpile data.
Brent oil futures rose 0.92% to $44.01 by 11:45 PM ET (3:45 AM GMT) and WTI futures jumped 1.06% to $41.80.
Oil has continued its recent rapid rise, with Brent and WTI futures both above the $40 mark. The gains come on the back of positive news from Pfizer’s COVID-19 vaccine trials and a continued drop in U.S. petroleum product stockpiles.
Crude oil stock data from the American Petroleum Institute (API) showed a draw of 5.147 million barrels as opposed to the 900,000-barrel draw forecast by Investing.com. API reported a draw of 8.010 million barrels for the previous week.
Monday’s vaccine news from Pfizer Inc (NYSE:PFE) is still boosting the market, with some investors seeing light at the end of the COVID-19 tunnel. However, there is yet to be certainty in that area.
“Once we get the COVID-19 vaccine spread across the globe and it does work as Pfizer has suggested, then we would expect to see more normal demand coming through for oil and with that higher prices,” David Lennox, a resource analyst at Fat Prophets, told Bloomberg.
“But there’s still a way to go before all that does happen," he added.
Encouraging forecasts for returns to pre-pandemic consumption levels in the mid-term are also helping push oil up. Tropical Storm Eta is also threatening to cut production from U.S. Gulf of Mexico rigs.
Asian demand is also helping to drive oil prices, with China stockpiles falling after months of growth, and independent refiners’ import quotas for next year having been raised against demand expectations. Japan’s demand has returned to close to pre-pandemic levels, also giving encouragement to the markets.
However, some analysts are wary of expecting much more in terms of gains.
“Price gains from here get tougher. Shutdowns in Europe are going to limit activity for the next month. There’s only so much you can do when you got a spot market that remains awash in oil,” Rob Haworth, senior investment strategist at U.S. Bank Wealth Management told Bloomberg.
Investors now await crude oil supply from the U.S. Energy Information Administration, due later in the day.