Oil prices continued to rise on the decline highlighted by the data in oil inventories. On Tuesday per barrel price of WTI crude oil futures rose by +0.88 percent to $48.00 while that for February Brent crude oil futures increased by +0.45 percent to $51.09 per barrel.
The rise in oil prices was driven by a report from the American Petroleum Institute (API) that US domestic crude oil inventories dropped 4.79 million barrels last week. If the data is confirmed today by the official EIA report on changes in oil and oil products reserves (the consensus forecast assumes a decrease in oil reserves in the country by 2.6 million barrels), then this will be the largest decrease in reserves since October.
However, the situation was clouded by Joe Biden’s statement that “Efforts to distribute and use the vaccine are not progressing as they should” and “at the current rate, it will take years, not months, to vaccinate the American people.” If this is true, then it will take much longer than investors and big players expect to recover demand for black gold – however, Biden has promised to significantly speed up the process after taking office, applying the law on defense production in order to force private companies to increase the production of materials needed to create vaccines and protective equipment.
In addition, shortly after Biden’s speech in Washington, Colorado Gov. Jared Polis said that a case of the more invasive strain of coronavirus B.1.1.7 had been detected in his state for the first time after in the UK. The new strain is spreading outside the UK and has already been found in continental Europe, Asia and North America. Many countries have stopped both passenger and freight traffic there with the UK.
OPEC+ will hold a meeting next week to decide on the production level for February. Countries participating in the agreement have agreed to soften quotas for oil production from January 2021 by 500 thousand barrels per day. Additionally, Russian Deputy Prime Minister Alexander Novak announced a possible increase in oil production in February.