Oil prices have slipped but pared some losses on news that the UK has become the first country to approve a vaccine for Covid-19.
The vaccine is expected to be rolled out from early next week.
Brent crude futures slipped $0.08 to $47.34 a barrel while the US West Texas Intermediate (WTI) crude futures fell $0.14 to reach $44.41 a barrel, Reuters reported.
Prices were hit earlier due to an unexpected build in oil inventories in the US and postponed talks on next year’s oil output policy by the Organization of the Petroleum Exporting Countries (OPEC), and allies, including Russia, together known as OPEC+, to 3 December.
Data released by industry group American Petroleum Institute (API) showed a rise in US crude stocks by 4.1 million barrels last week ending 27 November.
Earlier this year, the OPEC+ Group imposed production cuts of 7.7Mbpd to support prices as the Covid-19 pandemic affected fuel demand.
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It is highly expected that the group will extend these reductions into January-March next year due to a surge in Covid-19 infections.
DailyFX strategist Margaret Yang stated: “Oil traders have long been anticipating a three-to-six months delay in planned production hikes by the coalition, rendering oil prices vulnerable to unwinding trades should OPEC+ fail to deliver a plan to rein output.”
If the OPEC+ denies extending cuts, ANZ analysts estimated that the oil market surplus could run to records highs of 1.5Mbpd to 3Mbp in the first half of 2021.
However, the UAE said this week that it would be willing to support supply cuts only if compliance of the group members with respect to cut commitments improved.