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Brent crude hits $45 on COVID-19 vaccine hopes and U.S. oil stocks

Kitco News

LONDON (Reuters) - The Brent crude oil benchmark rose to a more than two-month high above $45 a barrel on Wednesday on hopes of an effective COVID-19 vaccine and an industry report showing U.S. crude inventories fell more than expected.

Brent was up $1.07, or 2.5%, at $44.68 by 1450 GMT after hitting a session high of $45.30 - the first time it has cleared the $45 threshold since early September.

U.S. West Texas Intermediate (WTI) crude added $1.09, or 2.6%, to $42.45.

Both benchmarks rose by nearly 3% on Tuesday.

“This week’s news about a coronavirus vaccine was encouraging and, alongside short-covering activity, strongly supported oil prices on Monday and Tuesday,” said UBS oil analyst Giovanni Staunovo.

The bank cautioned that European lockdowns and restored Libyan oil output could weigh on prices in the short term but forecast oil at $60 a barrel by the end of 2021, based on the likelihood that producers would continue to rein in supply.

U.S. crude stockpiles last week fell by 5.1 million barrels to about 482 million barrels, industry group data showed on Tuesday, compared with expectations for a reduction of 913,000 barrels in a Reuters poll of analysts. [API/S]

Both Brent and U.S. oil prices are up about 14% this week after initial trial data showed the experimental COVID-19 vaccine being developed by Pfizer Inc and Germany’s BioNTech was 90% effective.

Renewed restrictions in Europe and the United States to combat the coronavirus have slowed the fuel demand recovery, offsetting a rebound in Asian economies where consumption has almost returned to pre-COVID levels.

However, further price support came when Algeria’s energy minister said on Wednesday that the Organization of the Petroleum Exporting Countries (OPEC) and allies could extend oil production cuts into 2021, or even deepen them. Saudi Arabia’s energy minister had said on Monday that supply pact could be “tweaked”.

ADditional eporting by Koustav Samanta and Aaron Sheldrick; Editing by Edmund Blair and David Goodman

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