By Amrith Ramkumar 

Oil prices rose Wednesday, hitting a fresh 4 1/2 -month high with investors hoping for faster-than-expected coronavirus vaccine development and weighing a sizable drop in domestic crude stockpiles.

U.S. crude futures added 2.3% to $41.20 a barrel on the New York Mercantile Exchange, their highest close since early March. Prices are well below where they started the year, with the coronavirus denting demand, but have rebounded in recent weeks with some states and countries reopening and producers curtailing supply. U.S. crude briefly fell below $0 for the first time ever in late April due to a global oil glut.

Wednesday's gains for oil came with stocks and other investments climbing after new details about the first human study of Moderna Inc.'s experimental vaccine showed that it induced the desired immune response for all 45 people evaluated. Researchers said the results bolstered their decision to start a large clinical trial slated to start later this month.

The Moderna shot is just one of the clinical trials planned in the coming weeks, and traders will be closely monitoring the results to gauge how quickly a vaccine could ease the damage caused by the pandemic and support consumer confidence.

Analysts were also weighing the latest weekly U.S. crude inventory figures, which showed that stockpiles fell much more than expected last week. Inventories dropped 7.5 million barrels, compared with a 1.3-million-barrel decline projected by analysts and traders surveyed by The Wall Street Journal.

Despite rising coronavirus cases in much of the U.S., gasoline demand declined only modestly, the data showed, driving hopes that a weekslong rebound in fuel consumption could resume in the coming months. Meanwhile, U.S. crude output stayed flat at 11 million barrels a day for the third consecutive week, easing concerns about a quick increase in domestic production in response to the crude-price recovery.

Additionally, investors were parsing the latest reports about output cuts from the Organization of the Petroleum Exporting Countries and allies like Russia. Key OPEC members and their partners said Wednesday they have agreed to loosen current supply curbs by 1.6 million barrels a day with demand rising. The announcement was less severe than some analysts expected, and reports that extra cuts from countries that haven't been complying with the quotas are imminent have eased fears that higher OPEC supply could flood the market with oil again.

At the same time, many traders are still wary that key producers such as Saudi Arabia and Russia might increase supply too fast to maintain market share, keeping oil in its recent trading range.

"The price recovery is fragile and hinges not only upon avoiding a derailing of the demand recovery, but also OPEC+ adherence to quotas as they slowly ramp-up output in August," Paola Rodriguez-Masiu, senior oil-markets analyst at Rystad Energy, said.

Brent crude futures, the global gauge of oil prices, added 2.1% to $43.79 a barrel on the Intercontinental Exchange.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com

 

(END) Dow Jones Newswires

July 15, 2020 15:19 ET (19:19 GMT)

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