By Barani Krishnan
Investing.com - Oil prices rose for a third straight session on Wednesday, helped by supportive inventory data reported by the U.S. government for last week. Yet, the potential for outsized gains appeared to be diminishing, with the market looking toppy after nearly seven straight weeks of gains.
New York-traded West Texas Intermediate, the leading indicator for U.S. crude, settled up 20 cents, or 0.4%, at $47.82 per barrel.
London-traded Brent, the global benchmark for crude, finished Friday’s trade up 32 cents, or 0.6%, at $51.08 per barrel.
Oil prices have been on a tear since the start of November, gaining about $13 per barrel, or some 36%, on bets that people across the world might soon be able to travel freely as millions of doses of coronavirus vaccines were being prepared for delivery over the course of the next few weeks, after approval by relevant health authorities.
Wednesday’s gains came after the U.S. Energy Information Administration reported that crude inventories fell 3.1 million barrels last week, more than the 1.937 million-barrel drawdown forecast by analysts.
The decline would have been a welcome relief to oil longs after the 15-million barrel build during the previous week..
Fuel inventories reported by the EIA were also positive, rising less than expected.
Gasoline inventories rose 1 million barrels last week the EIA said, compared with expectations for a 1.6 million-barrel build.
Distillate stockpiles, which include diesel and heating oil, rose by 167,000 barrels in the week against expectations for a build of 886,000 barrels, the EIA data showed.
Distillate numbers are particularly watched at this time of year due to higher trucking activity for holiday season deliveries. Analysts say Pfizer’s vaccine rollout and Moderna’s soon-to-follow shots will also lead to higher usage of trucks as they attempt to deliver hundreds of millions of Covid-19 doses to Americans.
Despite the relatively bright inventory report from the EIA, analysts said the odds of crude prices making outsized gains appeared limited for now.
“WTI crude remains stuck in the mid-to-high $40s and it doesn't seem that will change anytime soon,” said Ed Moya at New York’s OANDA.