Brent crude on Thursday jumped above $50 a barrel for the first time since March with the rollout of Covid-19 vaccines outweighing concerns about swelling oil inventories.
The UK began a mass vaccination programme this week and it is expected immunisations will start soon in the US and Canada, fuelling optimism of a recovery in oil demand.
Brent crude, the international oil benchmark, rose 4.3 per cent to $50.95 a barrel in afternoon trading in London. West Texas Intermediate, the US marker, increased 4.6 per cent to $47.63 a barrel.
Governments imposed lockdowns and travel bans earlier this year, slowing the global economy and leading to a collapse in oil demand that took Brent to an 18-year low.
The price crash only reversed after major world producers — including the Opec cartel and Russia — agreed in April a record 9.7m barrels a day in supply cuts to bring the oil market into balance. The reduction in output has since eased to 7.7m b/d.
Oil prices rose on Thursday even as the most recent weekly report on US oil inventories showed a more than 15m barrel increase in crude stockpiles. This far exceeded expectations of a 1.4m barrel drop.
“It seems that cheap money, good sentiment on the stock market and hopes that demand will soon normalise thanks to corona vaccines count for more than the reality,” said analysts at Commerzbank.
Traders and oil analysts are watching market moves more closely as the Opec+ group looks to taper their curbs further, adding 500,000 b/d into the market from January.
The increase was much smaller than initially planned as delegates in last week’s meeting took a cautious approach to avoid knocking the fragile recovery in oil prices off course.