Brent crude surged above $ 50 a barrel on Thursday for the first time since March, with the rollout of Covid-19 vaccines outweighing concerns over rising oil inventories.
The UK launched a mass vaccination program this week and it is expected that vaccinations will begin soon in the US and Canada, fueling optimism for a recovery in oil demand.
Brent, the international oil benchmark, rose 4.3% to $ 50.95 a barrel on afternoon trading in London. West Texas Intermediate, the US marker, rose 4.6 percent to $ 47.63 a barrel.
Governments imposed lockdowns and travel bans earlier this year, slowing the global economy and leading to a collapse in demand for oil that took Brent to its lowest level in 18 years.
The fall in prices was only reversed after major world producers – including the Opec cartel and Russia – agreed in April to a record 9.7 million barrels per day in supply cuts to balance the oil market. The reduction in production has since eased to 7.7 MB / d.
Oil prices rose Thursday even as the latest weekly report on U.S. oil inventories showed an increase of more than 15 million barrels in crude inventories. This far exceeded expectations of a drop of 1.4 m barrels.
“It seems like cheap money, good sentiment in the stock market and the hope that demand will soon normalize thanks to corona vaccines matter more than reality,” analysts at Commerzbank said.
Traders and oil analysts are monitoring market movements more closely as the Opec + group seeks to further reduce its brakes, adding 500,000 bpd to the market from January.
The increase was much smaller than initially expected as delegates last week’s meeting took a cautious approach to avoid derailing the fragile recovery in oil prices.