Oil prices up as dollar and US oil inventories fall

LONDON: Oil gained ground on Wednesday on the back of a weaker dollar, a decline in US crude oil inventories and as Britain approved another coronavirus vaccine, but both benchmark contracts were on track to end the year about 20% lower.

Brent crude futures were up 36 cents to $51.45 a barrel by 1317 GMT, having started the year above $66. US West Texas Intermediate (WTI) crude had added 37 cents to trade at $48.37, down from around $62 at the beginning of 2020.

Continued concern about coronavirus-related restrictions weighing on fuel demand were countered by some bullish factors.

The US dollar hit its lowest against a basket of currencies since 2018, making oil cheaper for holders of other currencies.

Raising hopes of a faster normalisation of travel and work, Britain on Wednesday became the first country to approve a coronavirus vaccine developed by the University of Oxford and AstraZeneca.

World stocks were near record highs with investors betting on a strong economic recovery next year, with little sign of policymakers winding back massive stimulus efforts and the United States on the brink of agreeing a new package.

US crude oil stockpiles fell by 4.8 million barrels last week to about 492.9 million barrels, exceeding analysts' expectations in a Reuters poll for a fall of 2.6 million barrels, data from API showed.

On the supply front, a Jan. 4 meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, looms over the market.

OPEC+ is set to boost output by 500,000 barrels per day (bpd) in January, and Russia supports another increase of the same amount in February after the group slashed its production in 2020 to support slumping oil prices.