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Oil Down Over Another Surprise Build in U.S. Crude Oil Supplies

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By Gina Lee

Investing.com – Oil was down on Wednesday morning in Asia, with investors digesting yet another week of builds in U.S. crude oil inventories. Adding to mounting fuel demand worries were tighter restrictive measures in Europe and other areas to curb rising numbers of COVID-19 cases.

Brent oil futures fell 0.26% to $50.63 by 12:27 AM ET (4:27 AM GMT) and WTI futures were down 0.21% to $47.52.

Crude oil supply data from the American Petroleum Institute (API) showed a 1.973-million-barrel build for the week ending Dec. 11. It was a bigger gain than the 3.5-million-barrel draw in forecasts prepared by Investing.com and the 1.141-million-barrel build reported for the previous week.

Investors now await crude oil inventory data from the U.S. Energy Information Administration, due to be released later in the day.

“Crude prices are slightly softer after the API inventory report posted a second consecutive build,” OANDA senior market analyst Edward Moya told Reuters.

Sentiment was further dampened after the International Energy Agency (IEA) issued a warning on Tuesday that the rollout of COVID-19 vaccines over the past weeks is not likely to quickly reverse the destruction wrought on oil demand.

Citing the scarce use of jet fuel as fewer people travel by air, the IEA also revised down its estimates for oil demand this year by 50,000 barrels per day (bpd) and for 2021 by 170,000 bpd.

Some investors were also pessimistic about the black liquid’s short-term prospects.

“On the demand side, the biggest near-term downside risk to oil demand expectations is the U.S., predominately due to persistent weaknesses in U.S. gasoline demand given the current trajectory of COVID-19 in the country,” FGE analysts said in a note.

Meanwhile, progress on vaccine rollouts continues. Moderna Inc (NASDAQ:MRNA)'s COVID-19 vaccine mRNA-1273 looks set to receive U.S. regulatory authorization within the week. The U.S. also expanded its roll-out program for BNT162b2, the vaccine codeveloped by Pfizer Inc (NYSE:PFE) and BioNTech SE (F:22UAy) to hundreds of additional distribution centers on Tuesday. Thousands more healthcare workers will be inoculated under the expansion, part of a mass immunization program that will reach the general public in the coming months.

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