Crude oil prices rose today on the back of a weaker dollar, a decline in US inventories and Britain’s approval of a second Covid-19 vaccine, but both benchmark contracts remained on track for a decline of about 20% for the year.
Brent crude futures gained 15 cents to $51.25 a barrel by 1453 GMT, having started the year above $66. US West Texas Intermediate (WTI) crude had added 11 cents to trade at $48.11, down from about $62 at the start of 2020.
Both contracts turned negative briefly in early US trading as a bigger fiscal aid package in the United States looked increasingly unlikely, dampening hopes for a swifter recovery of oil demand that has been hammered by the Covid-19 pandemic.
On the supply front, a Jan. 4 meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, is set to boost output by 500,000 barrels per day (bpd) in January.
Bob Yawger, director of energy futures at investment bank Mizuho, said that bearish sentiment is being created by OPEC’s preparations to pump more oil and the increasingly unlikely prospect of Americans receiving $2,000 stimulus cheques.
Oil prices found some support on Wednesday from the US dollar hitting its lowest against a basket of currencies since 2018, making oil cheaper for holders of other currencies. Raising hopes of a faster normalisation of travel and work, Britain on Wednesday became the first country to approve a coronavirus vaccine developed by the University of Oxford and AstraZeneca.