UPDATE 6-Oil rally stalls on signs of more supply, demand doubts

(Updates prices)
By Julia Payne
LONDON, Nov 26 (Reuters) - Oil slipped from seven-month
highs on Thursday as signs of growing supplies helped to halt a
rally driven by optimism that COVID-19 vaccines will revive fuel
demand.
Brent futures LCOc1 had risen to nearly $50 a barrel this
week after three major pharmaceutical companies announced
progress on vaccines that could start to be rolled out before
the end of the year. But Brent was down 74 cents, or 1.5%, at $47.87 a barrel by
1650 GMT on Thursday, having dropped as much as $1. The contract
gained about 1.6% in the previous session.
West Texas Intermediate (WTI) crude CLc1 fell 66 cents, or
1.4%, to $45.05 after gaining 1.8% on Wednesday.
"Despite a number of strong fundamentals rallying the
markets, especially vaccine development supporting oil, bearish
concerns remain," said Avtar Sandu, senior commodities manager
at Phillip Futures.
Lockdowns as the COVID-19 pandemic worsens, the rising
number of rigs employed in the United States and increased
production from Libya are risk factors for bulls, he said.
U.S. President-elect Joe Biden has urged people to forgo big
family gatherings, wear protective masks and maintain social
distancing for the Thanksgiving holiday. But Americans are
defying pleas from officials to stay at home.
The United States has recorded 2.3 million new infections in
the past two weeks. While fuel demand has fallen with the second round of
lockdowns, non-compliance has translated into a smaller than
expected drop in European demand, Rystad Energy said.
"The restrictions currently imposed in Europe – had they
been adhered to widely – should have resulted in a 20% to 30%
drop in activity. Instead, as our real-time measurements show,
we observe a drop of only around 12%," Rystad said in a note.
Investors also await next week's OPEC meeting.
The Organization of the Petroleum Exporting Countries (OPEC)
and allies including Russia are leaning towards delaying next
year's planned increase in oil output to help the market weather
the COVID-19 second wave and rising Libyan output, three sources
close to OPEC+ said.
"Tomorrow traders will start positioning themselves for next
week's OPEC+ meeting. The consensus among analysts is a
three-month extension of the current ceiling, anything less than
that will trigger a sharp sell-off," said Tamas Varga, analyst
at PVM Oil Associates.