Oil prices rose more than 1% on Wednesday as the market awaited a pact from producers on output, which many traders expect will continue to be reined in, and Britain's approval of a COVID-19 vaccine boosted hopes for a demand recovery.
Traders were watching the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, known as OPEC+, which postponed talks on next year's oil output policy to Thursday from Tuesday, according to sources.
"It looks like there is headway being made, which the market is looking for," said John Kilduff, partner at Again Capital LLC in New York.
This year, the group imposed production cuts of 7.7 million barrels per day (bpd) as the coronavirus pandemic hit fuel demand.
It had been widely expected to roll those reductions over into January-March 2021 amid new spikes in COVID-19 cases.
But the United Arab Emirates (UAE) said this week that even though it could support a rollover, it would struggle to continue with the same deep output reductions into 2021.
On Wednesday, Britain became the first Western country to approve a COVID-19 vaccine, jumping ahead of the United States and the European Union in a possible return to normal life and recovery in oil demand.
"News of the UK vaccine approval is what the oil market needed more than anything else to get demand up...the rest is largely just noise," said John Kilduff, partner at Again Capital LLC in New York.
U.S. crude inventories fell by 679,000 barrels in the week to Nov. 27, according to data from the Energy Information Administration on Wednesday, defying the build the American Petroleum Institute reported on Tuesday.
U.S. oil production rose 100,000 barrels per day last week to its highest level since May, the EIA data showed.