Oil holds above $50/barrel on U.S. stocks draw, Brexit deal hopes

imageCommodities15 minutes ago (Dec 24, 2020 10:30AM ET)

(C) Reuters. Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub

By Yuka Obayashi and Dmitry Zhdannikov

TOKYO/LONDON (Reuters) -Oil prices edged down on Thursday but were holding well above $50 per barrel in light holiday trade as a drop in U.S. stockpiles spurred demand hopes, while hints of an imminent Brexit deal underpinned investors’ risk appetite.

Brent crude futures were down 30 cents, or 0.6%, to $50.90 a barrel at 1100 GMT, while U.S. West Texas Intermediate (WTI) crude was down 34 cents, or 0.7%, to $47.70.

Both contracts gained more than 2% on Wednesday.

“Lower U.S. inventories of crude and fuels as well as signs of a potential Brexit deal which led to weaker U.S. dollar were good news,” said Hiroyuki Kikukawa, general manager of research at Nissan (OTC:NSANY) Securities.

“But lingering worries over a new variant of the novel coronavirus capped gains,” he said, adding oil markets were quiet with investors in holiday mode.

U.S. crude inventories fell by 562,000 barrels in the week to Dec. 18 to 499.5 million barrels, the Energy Information Administration (EIA) said on Wednesday.

Gasoline stocks fell by a surprise 1.1 million barrels to 237.8 million barrels, the EIA said, while distillate stockpiles fell by a more-than-expected 2.3 million barrels to 148.9 million barrels.

Oil prices also drew support from news that Britain and the European Union were on the cusp of striking a narrow trade deal, swerving away from a chaotic finale to the Brexit split.

“Risk appetite among investors improved also because of a rebound in global equities, which underlined that fears over a new variant of the coronavirus have receded a little,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

At least four drugmakers expect their COVID-19 vaccines will be effective against the new fast-spreading variant of the virus that is raging in Britain, and are performing tests that should provide confirmation in a few weeks.

On the supply side, U.S. energy firms this week added oil and natural gas rigs for a fifth week in a row.

Oil holds above $50/barrel on U.S. stocks draw, Brexit deal hopes

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.