Oil climbed as the UK is poised to grant regulatory approval to another Covid-19 vaccine and as the US passed its stimulus bill into law.
Futures in New York edged toward $49 a barrel after dipping in early trading. Britain’s drug regulator could clear the shot produced by AstraZeneca Plc and the University of Oxford for use as early as this week, according to a person familiar with the matter. This could give it another tool to fight the pandemic.
Crude reversed losses of as much as 1.5% after President Donald Trump signed the long-awaited bill containing $900 billion of virus relief that’s expected to boost energy demand in the world’s largest economy. Trump had previously expressed his displeasure with the package that Congress approved last week.
As OPEC+ prepares to meet next week, indications of changing sentiment among its members on their previously-agreed cuts are being watched closely. The OPEC+ alliance plans to return 500,000 barrels a day of output to the market from January, but Algerian energy minister Abdelmadjid Attar’s suggestion the alliance should remain cautious in response to the coronavirus mutation offers slight price support, said Giovanni Staunovo, a commodities analyst at UBS.
Despite today’s gains, oil is finishing the year on a somber note. Traders are weighing the short-term demand risk of more travel restrictions as a result of a new mutation in the coronavirus, against optimism over vaccine rollouts, which will eventually boost energy demand. There’s also evidence the resurgent pandemic is stalling the economic recovery in some parts of Asia.
“I see a very quiet market from now until the end of the year, but the direction for the next couple of days will be downward” due to the new virus strain, said Howie Lee, an economist at Oversea-Chinese Banking Corp. “Since it’s nearing the year-end, traders are just happy to close their books.”
- West Texas Intermediate for February delivery rose 1.5% to $48.94 a barrel on the New York Mercantile Exchange as of 10 a.m. in London, the highest in 10 days
- Brent for February settlement increased 1.3% to $51.97 on the ICE Futures Europe exchange after closing up 0.2% on Thursday
President Trump, meanwhile, has raised geopolitical tensions in the Middle East, accusing Iran of being responsible for a rocket attack near the U.S. embassy in Baghdad.
The Islamic Republic’s Foreign Ministry said the claims were baseless. The country’s oil minister said this month that Iran was planning to double its production in 2021, which will clash with OPEC+ efforts to gradually increase supply without flooding the market.