Oil Steady Near $47 Ahead of U.S. Coronavirus Vaccine Rollout

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Dec 14 2020, 5:08 AMDec 14 2020, 7:30 AMDecember 14 2020, 5:08 AMDecember 14 2020, 7:30 AM

(Bloomberg) -- Oil was steady in New York ahead of the rollout of the first Covid-19 vaccine in the U.S., raising optimism of a recovery in fuel demand in the world’s biggest crude consumer.

Futures traded near $47 a barrel after losing 0.5% on Friday. First deliveries of the Pfizer Inc.-BioNTech SE vaccine will be made Monday after the drug gained emergency authorization last week, with President Trump and other officials being offered the shot as part of a plan to ensure continuity of government.

The market will also be looking for progress on new stimulus in the U.S., with a bipartisan group of lawmakers poised to unveil a $908 billion pandemic relief bill, although there’s no guarantee it will pass Congress. Brexit talks were extended, meanwhile, raising hopes of a deal.

Oil in New York has advanced about 30% since the end of October with global benchmark Brent rising to a nine-month high and topping $50 a barrel last week after vaccine breakthroughs and as OPEC+ reached a compromise deal on output. Iran, meanwhile, plans to almost double production in the next year in anticipation of a loosening of sanctions after Joe Biden becomes president.

A further acceleration in vaccine developments or breakthrough in stimulus talks may help Brent end 2020 at $55 a barrel, said Howie Lee, an economist at Oversea-Chinese Banking Corp. Uncertainty over OPEC supply, however, could cap oil’s advance for now, he added.

Prices
West Texas Intermediate for January delivery rose 4 cents to $46.61 a barrel on the New York Mercantile Exchange at 9:38 a.m. Singapore time. Futures eked out a 0.7% gain last week. Brent for February settlement gained 0.2% to $50.06 on the ICE Futures Europe exchange after losing 0.6% on Friday.

Brent’s prompt timespread was 7 cents a barrel in backwardation, a bullish market structure where near-dated contracts are more expensive than later dated ones. That compares with a 1 cent contango a week earlier.

All 50 U.S. states are expected to have the vaccine by Wednesday, with 2.9 million doses delivered in the first shipment. In general, the people to get the shot will be health-care workers and vulnerable residents of care homes.

While parts of Asia have rebounded strongly from the virus-led crash and there are signs global demand is picking up after a November trough, the outbreak is continuing to dent consumption in some nations. South Korea is considering stricter social-distancing measures and Germany will enter a hard lockdown from Wednesday, which will last until at least Jan. 10.