Oil futures traded near unchanged Wednesday, underpinned by hopes for progress toward another U.S. economic relief package and the ongoing rollout of a COVID-19 vaccine, while upside was capped by data showing a rise in U.S. crude inventories.
West Texas Intermediate crude for January delivery fell 3 cents, or 0.1%, to $47.59 a barrel on the New York Mercantile Exchange. February Brent crude, the global benchmark, was off 5 cents, or 0.1%, at $50.71 a barrel on ICE Futures Europe.
Both benchmarks finished at more-than-nine-month highs on Tuesday.
“The energy market is obviously looking beyond the short term gloom, and gunning for the light at the end of the tunnel,” said Robert Yawger, director of energy at Mizuho Securities, in a note. “The vaccine has spawned hope for the future, with a U.S. stimulus deal likely to supersize rallies.”
Congressional leaders met face to face late Tuesday as efforts continued toward another round of economic relief. Meanwhile, the rollout of the COVID-19 vaccine developed by Pfizer Inc. and BioNTech SE continues, while other vaccine candidates were seen moving closer to approval.
On the supply front, the American Petroleum Institute reported late Tuesday that U.S. crude supplies rose by 1.97 million barrels in the week ended Dec. 11, according to sources.
The data also showed gasoline stockpiles up by 828,000 barrels, while distillate inventories rose by 4.8 million barrels. Crude stocks at the Cushing, Okla., storage hub, meanwhile, edged down by 165,000 barrels for the week, sources said.
More closely followed figures from the Energy Information Administration are due later Wednesday. On average, the EIA data are expected to show crude inventories down by 1.9 million barrels last week, according to a survey of analysts conducted by S&P Global Platts, which also forecast supply increases of 2.6 million barrels for gasoline and 1.1 million barrels in distillates.
Yawger said that while he is looking for a draw in crude and product inventories, another rise in supplies could be the spark for near-term weakness.
“Even a percentage build across the board would be a bad sign, implying a size slide in demand versus a size increase in supply trying to take advantage of the ride towards $50,” he wrote. “I don’t think that will happen, but key energy markets are in overbought territory, and something is going to drive them lower, most likely sooner rather than later.”