Crude oil prices rise despite US inventories build-up
- Crude oil markets have looked past the 15.189 million barrels build-up in US inventories.
- Investors are optimistic that the FDA will approve the Pfizer vaccine today.
- The terror attack on Iraq's oilfield has raised concerns over additional disruptions.
Crude oil prices are up for the second day due to the continued vaccine-related optimism. The positive sentiment in the market has led investors to look past the supply build in the US. WTI futures were up by 0.18% to trade at $45.76. WTI was also on an upward trend, trading at 49.18.
Oil markets shrug off supply build
On 9th December, the Energy Information Administration released data on US crude oil inventories. Last week, the amount of oil in storage rose by 15.189 million barrels against the expected change of -1.424 million barrels.
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It is the second week in a row that the inventories have increased beyond the forecasted and previous readings. In the prior press release, the crude oil inventories missed the predicted change of -2.358 million barrels by getting to -0.679 million barrels.
Usually, the crude oil markets react vigorously to changes in inventories. Investors use the data to evaluate the current demand for oil. For example, EIA’s inventories data on 2nd December pushed WTI futures down to about $43.88.
Interestingly, investors seem to have looked past the continued supply build. Based on a 5-minute chart, WTI futures dropped to ~$44.93 shortly after EIA’s press release. However, the sentiment in the market quickly shifted as crude oil prices took an upward momentum.
Crude oil prices continue to ride on positive vaccine news
Over the past weeks, crude oil prices have been buoyed by the COVID-19 vaccine-related optimism. Investors are hopeful that the pre-pandemic norm will soon return. In the UK, vaccination began on 8th December.
At the same time, the Pfizer vaccine is a step closer to getting the green light from the FDA. On Tuesday, the U.S. regulators confirmed the vaccine’s effectiveness. Investors looking to trade oil are optimistic that the FDA will approve the vaccine today.
Furthermore, Canada has become the latest country to approve the Pfizer vaccine. Health Canada issued the statement on the morning of 10th December. The progress of the coronavirus vaccine has fuelled the upward momentum of crude oil prices.
Terrorist attack on Iraq’s oilfield support crude oil prices
On Wednesday, two wells within the Khabbaz oilfield in Iraq were set on fire in a terrorist attack. However, the nation’s oil ministry indicated that the fire did not affect the oilfield’s overall production.
According to Iraq’s oil officials, the oilfield’s production is around 25,000 bpd. Nonetheless, production at the attacked wells does not exceed 2,000 bpd. Although the wells are relatively small, the terrorist act has raised concerns among investors over the possibility of additional disruptions. With Iraq being the 2nd largest oil producer within the OPEC, such interruptions could affect crude oil supply.