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Oil Extends Gain With Stockpiles Draw Adding to Vaccine Optimism

Source: Bloomberg News, by Saket Sundria and James Thornhill

Oil rose for a fifth day — the longest run of gains since May — after a surprise drop in U.S. crude stockpiles and a weaker dollar gave more impetus to a rally that’s been driven by vaccine breakthroughs.

Futures in New York climbed toward $46 a barrel after closing up 1.8% on Wednesday. U.S. oil inventories fell by 754,000 barrels last week, government data show, compared with forecasts for a build. A dollar index was near a two-year low, boosting the appeal of commodities priced in the currency.

Crude has jumped around 28% in November as signs Covid-19 vaccines could soon be rolled out led to expectations for a swift recovery in energy demand next year, while also reshaping the oil futures curve. Chinese and Indian refiners, meanwhile, have issued a flurry of buy tenders seeking crude for loading in January, highlighting the strong demand coming from parts of Asia.

The rapid price gains pose a headache for OPEC+ before its meeting next week to decide whether to postpone a planned increase in output, as it gives members who want to pump more scope to argue a delay is unnecessary. In the latest sign of rifts within the group, Iraq’s deputy leader said that OPEC should take members’ economic and political conditions into account when deciding production quotas rather than adopting a “one-size-fits-all” approach.

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