Oil Down Over Large Build in U.S. Supplies, but Boosted by COVID-19 Vaccine News

Oil was down on Wednesday morning in Asia, with concerns mounting after a larger-than-expected build in U.S. crude oil supplies during the previous week. However, positive vaccines news fueled hopes of a recovery in fuel demand and capped the black liquid’s losses.

Brent oil futures fell 0.45% to $48.62 by 11:39 PM ET (3:39 AM GMT) and WTI futures were down 0.44% to $45.40. Both Brent and WTI futures stayed above the $40 mark.

Data from the American Petroleum Institute released on Tuesday showed a 1.141-million-barrel build in U.S. crude oil supplies for the week ending Dec. 4.

The build was much bigger than the 1.514-million-barrel draw in forecasts prepared by Investing.com, but was down from the previous week’s 4.146-million-barrel build.

Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day.

“The recent rally looks to be overdone from a fundamental point of view, given rising oil output in Libya and the United States with weaker fuel demand across the globe,” Fujitomi Co. chief analyst Kazuhiko Saito told Reuters.

“But the bullish tone is likely to continue amid hopes the pandemic can be brought under control with vaccines next year,” Saito added.

On the vaccines front, the U.K. has already seen the first patients inoculated with BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE:PFE) and BioNTech SE (F:22UAy). The U.K.’s Medicines & Healthcare Products Regulatory Agency granted a temporary authorization for emergency use of the vaccine during the previous week.

The U.S. Food and Drug Administration (FDA) will convene to discuss BNT162b2 on Thursday. Should the FDA grant emergency use authorization during its meeting, distribution could begin within 24 hours, according to Health & Human Services Secretary Alex Azar. The FDA has already released documents that raised no new red flags over the safety or efficacy of the vaccine ahead of the meeting.

The news helped allay investor fears as a sharp uptick in COVID-19 cases saw California, Germany, South Korea and Hong Kong all announce tightened restrictive measures in recent days.

The number of global COVID-19 cases has now passed the 68.1 million mark, with the number of U.S. cases passing the 15.1 million mark, as of Dec. 9, according to Johns Hopkins University data.

Meanwhile, in a further sign of increasing confidence in fuel recovery driven by COVID-19 vaccines, hedge fund managers were substantial buyers of petroleum futures and options last week for the fourth consecutive week.