Oil prices have slipped after an unexpected increase in US oil inventories, triggering new demand concerns.

Brent crude futures dropped $0.18 to $48.66 a barrel, while the US West Texas Intermediate (WTI) crude futures slipped $0.15 to $45.45 per barrel, reported Reuters.

Earlier, the American Petroleum Institute (API) said that the US crude stocks soared by 1.14 million barrels, though analyst forecasts in a Reuters poll predicted a draw of 1.42 million barrels.

However, the oil prices held some earlier gains due to positive Covid-19 vaccine developments as the UK commenced mass-inoculation of its population.

Sunward Trading chief analyst Chiyoki Chen was quoted by the news agency as saying: “The build in US crude inventories raised a sense of caution among investors and prompted them to unwind long positions ahead of the [Energy Information Administration] EIA data.

“But brighter news about progress in vaccines development and hopes for US economic stimulus by President-elect Joe Biden kept overall market sentiment upbeat.”

Despite the vaccine development, several countries continue to struggle to contain the spread of coronavirus cases, with Germany and South Korea announcing new strict measures.

Last week, OPEC+ oil producing group agreed to increase production by 500,000 barrels per day (bpd) next month. The group is expected to hold next meeting on 4 January 2021.

Separately, EIA had revised its US crude oil production forecast for next year to 11.10 million bpd.