Oil up, buoyed by vaccine hopes

LONDON, December 10, 2020 – Oil was up on Thursday morning in Asia, with the UK’s rollout of a Covid-19 vaccine and the imminent arrival of the same vaccine in the US spurring hopes of a recovery in fuel demand and eclipsing a larger-than-expected build in US crude stocks during the previous week.

Brent oil futures were up 0.53% to $49.12 by 101:59 PM ET (3:59 AM GMT) and WTI futures rose 0.62% to $45.80. Prices saw little change overnight but remained above the $40 mark.

A plunge in US crude exports to their lowest level since 2018 saw an unusually large build in US crude stocks. Data from the US Energy Information Administration (EIA)released overnight showed a 15.189-million-barrel build for the week to Dec. 4, much bigger than the 1.424-million-barrel draw in forecasts prepared by Investing.com and the previous week’s 679,000-barrel draw.

The EIA data follows that released by the American Petroleum Institute on Tuesday showing a 1.141-million-barrel build in US crude oil supplies, also bigger than the forecast 1.514-million-barrel draw but down from the previous week’s 4.146-million-barrel build.

However, some investors remained optimistic despite the data.

“Optimism over the vaccine prevails and continues to limit any serious downside action,” Axi chief market strategist Stephen Innes said in a note.

Driving optimism for investors such as Innes are Covid-19 vaccines. The US Food and Drug Administration (FDA) will meet later in the day to discuss BNT162b2, the Covid-19 vaccine co-developed by Pfizer (NYSE:PFE) and BioNTech SE (F:22UAy). Should the FDA grant emergency use authorization during its meeting which is widely expected, distribution could begin as soon as 24 hours after the decision, Health & Human Services Secretary Alex Azar has said.

Health Canada gave its nod to the vaccine on Wednesday, following the UK’s Medicines & Healthcare Products Regulatory Agency (MHRA)’s temporary authorization for emergency use issued during the previous week. Although the UK has already inoculated its first patients, MHRA has warned that anyone with a history of anaphylaxis to a medicine or food should not be inoculated.

Also boosting oil prices was investor jitters following the incineration of two wells at a small oilfield in northern Iraq, described by the government as a “terrorist attack”.

Although the incident has not impacted production at the oilfield, some investors expressed concern.

“While the wells were small, it has raised concerns of further disruptions,” ANZ Research said in a note.

First published on Investing.com

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