Oil Price Fundamental Daily Forecast – Oil Jumps as API Crude Stocks Decline, Hopes for COVID-19 Vaccine Rise

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are surging on Wednesday after an industry report showed U.S. crude inventories fell more than expected and as hopes for an effective COVID-19 vaccine continued to bolster risk sentiment.

At 10:23 GMT, December WTI crude oil is trading $42.81, up $1.45 or +3.51% and January Brent crude oil is at $45.08, up $1.47 or +3.37%.

Although oil prices are being supported by the positive news on the vaccine, the overall fuel demand outlook remains clouded as coronavirus restrictions are reimposed in Europe and United States.

However, this potentially bearish news is being offset by the news that initial trials data showed the experimental coronavirus vaccine being developed by Pfizer Inc and Germany’s BioNTech was 90% effective.

Increased Libyan oil output could weigh on prices in the short-term, but the likelihood that OPEC+ producers would continue to rein in supply is expected to outweigh that increase in production.

American Petroleum Institute Weekly Inventories Report

The API reported late Tuesday a major draw in crude oil inventories of 5.147 million barrels for the week-ending November 6. Analysts had predicted an inventory draw of just 913,000 barrels.

Oil production fell last week, continuing its seesaw action as it bounces between 9.7 million bpd and 11.1 million bpd. U.S. oil production currently sits at 10.5 million bpd, according to the Energy Information Administration (EIA).

The API also reported a draw in gasoline inventories of 3.297-million barrels of gasoline for the week-ending November 6 – compared to the previous week’s 2.45-million-barrel build. Analysts had expected a 263,000-barrel draw for the week.

Distillate inventories were down by a whopping 5.619-million barrels for the week, compared to last week’s 577,000-barrel draw, while Cushing inventories fell by 1.17-million barrels.

Daily Forecast

Both Brent and U.S. oil prices are up more than 13% this week since the announcement of the 90% effective COVID-19 vaccine results. Additional support is being provided by major media outlets calling the U.S. Presidential Election for Democratic challenger Joe Biden and OPEC+ hints that it may extend the current round of production cuts beyond January.

Potentially bearish factors this week include the continued increase of oil production in Libya, and additional lockdowns in Europe.

There is no U.S. Energy Information Administration (EIA) Weekly Inventories Report today due to the Veteran’s Day government holiday.

December WTI crude oil futures have now cleared three former tops at $41.90, $41.74 and $42.02, putting it in a position to surge into the August 26 top at $44.33.

For a look at all of today’s economic events, check out our economic calendar.