Oil shrugs off inventory gain amid sustained vaccine rally

Global oil prices hit the highest level since March on Tuesday, rising above $47 per barrel (pb) as hopes for a COVID-19 vaccine rollout within weeks brightened the outlook for fuel consumption.

Brent crude, the worldwide benchmark, gained more than 3 percent to climb $47.82 pb. Earlier in the session, the US futures contract fell more than 1% amid concerns about oversupply and doubts about a vaccine to end the coronavirus pandemic, but at the mid-session, the market is trading higher, putting it on course for a fourth straight week of gains ahead of an OPEC+ meeting early next week.

"With much of oil's rally in November built on expectation, sentiment and speculative fast money, some sort of correction was long overdue", said Jeffrey Halley, senior market analyst at OANDA.

The surge in crude prices has accompanied a slew of positive updates from pharmaceutical companies on their progress toward a COVID-19 vaccine.

However, any viable vaccine is not likely to be ready for mass use in the next few months, meaning lockdowns and travel restrictions will be in place into next year.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russian Federation that make up the OPEC+ grouping are leaning towards delaying next year's planned increase in oil output, three sources close to OPEC+ said.

The current 7.7 million barrels per day in cuts - roughly eight per cent of pre-pandemic demand - are scheduled to ease to 5.8 million bpd in January.

The American Petroleum Institute (API), an industry association, said on Tuesday that US crude stocks rose by 3.8 million barrels in the week to November 20 to around 490 million barrels, against analysts' expectations in a Reuters poll for a build of 127,000 barrels.

U.S. crude oil inventories fell last week, as well as distillate stocks, while gasoline stockpiles rose sharply, the U.S. Energy...