Meanwhile, Brazil is credited as a demand hot spot for oil: File Image/PixaBay
Wednesday saw a second straight session of tepid crude trading, thanks to a build in U.S. inventories off-setting the good news of a Covid vaccine possibly being approved in the U.S. as early as end of this week.
Crude inventories rose by 15.2 million barrels to 503.2 million barrels last week, according to the Energy Information Administration, compared with analytical expectations for a 1.4 million barrel drop, and this resulted in prices falling 1 percent earlier in the session before vaccine hopes caused Brent to settle up 2 cents to $48.86 per barrel; West Texas Intermediate fell 8 cents to settle at $45.52 per barrel.
John Kilduff, founding partner at Again Capital, remarked, “The market is definitely in a state of shock, but overall this is looking like a fluke report and the market can detect brighter days ahead.”
John Kilduff, founding partner, Again Capital
The market can detect brighter days ahead
Indeed, the prospect of Covid ravaged America receiving vaccines sooner than later thanks to anticipated FDA approval dovetails with the commencement earlier this week of mass inoculations in the United Kingdom and the general consensus among industry leaders that this is the beginning of the end for the pandemic.
In related news, Brazil on Wednesday was cited as one of the few bright spots for oil demand outside of Asia, with fuel consumption already surpassing pre-Covid numbers and expected to be even stronger next year.
Meanwhile, it was also reported that Egypt has almost doubled its oil hedges during the 2020-21 fiscal year ending in June, buying more derivative contracts to protect itself against a rise in oil costs as some importers seek to take advantage of this year's price rout.
Finally, Wednesday provided a glimpse into the ultimate fate of oil, thanks to Ashwani Gupta, chief operating officer of Nissan, telling media that a turning point has been reached with the electrification of cars and that Nissan is "ready to address that opportunity everywhere in the world."
Gupta was referring to growing infrastructure supporting electric vehicles and the fact that a record 7.2 million vehicles were sold in 2019, with 47 percent of these located in China.