(Bloomberg) -- Oil held near its highest level in almost 10 months after an industry report pointed to an increase in U.S. crude stockpiles, taking some of the steam out of a stimulus and vaccine-led rally.
Futures traded near $48 a barrel in New York after the American Petroleum Institute reported crude inventories climbed by 1.97 million barrels last week, according to people familiar with the data. That would be a second weekly gain if confirmed by official government figures on Wednesday.
In Asia, meanwhile, the demand recovery is uneven. China’s daily oil refining rose to a record last month, but South Korea’s crude imports slid to the lowest level in 10 years in November and purchases are set to fall further.
Optimism about a swift recovery in fuel demand with the roll-out of the vaccine has oil trading at levels last seen before the outbreak. The market, however, is still facing a number of near-term hurdles, including a resurgent virus in some regions and more supply from OPEC+ next month after the group agreed to gradually ease its crude production cuts.
“There’s a huge risk to the vaccine rally, we are at peak vaccine optimism,” said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific in Sydney. Oil may face further headwinds from a stronger U.S. dollar or a breakdown in the OPEC+ output agreement, he said.
Crude has climbed 2.3% over the past two sessions to the highest level since February as the U.S. Congress moved toward a stimulus package and as the nation started delivering the first doses of a Covid-19 vaccine.
The International Energy Agency also warned that the crude glut left behind by the pandemic will clear by the end of next year as the market faces a gradual recovery marked by renewed strains on demand.
See also: OPEC’s President Says Oil Cartel Cannot Rush Output Increases
U.S. gasoline stockpiles, meanwhile, expanded by 828,000 barrels last week, the API reported Tuesday. Inventories of distillates, a category that includes diesel, rose by 4.76 million barrels.
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