Oil rose above $50 a barrel on Tuesday as optimism from the rollout of coronavirus vaccines balanced out tighter lockdowns in Europe and forecasts of a slower demand recovery.
The United States began vaccinating people on Monday as the country’s Covid-19 death toll crossed 300,000. Britain and Canada have also begun to administer shots.
Brent crude rose $0.2, or 0.4%, to $50.49 a barrel at 1310 GMT. US West Texas Intermediate (WTI) crude was up $0.16 at $47.15.
Oil has recovered in the past few weeks, with Brent reaching $51.06 on December 10, its highest since March, supported by hopes of demand recovery. Prices had dropped to historic lows in March as the pandemic took hold.
“Brent is continuing to defy all the negative news,” said Carsten Fritsch, analyst at Commerzbank. “More and more countries in Europe and states in the US are tightening the corona restrictions over Christmas and the new year, which is likely to weigh on demand.”
London stepped up pandemic restrictions requiring bars and restaurants to close, Italy is considering more stringent steps over Christmas and Germany is likely to be under lockdown until early 2021.
Forecasters are also trimming demand numbers. The International Energy Agency on Tuesday said that any vaccine impact on demand is several months away. Organisation of the Petroleum Exporting Countries (OPEC) on Monday said oil demand will rise more slowly than expected.
“There is a growing agreement between forecasting agencies that the improvement in global oil demand might not start at the beginning of next year but in the second half,” said Tamas Varga of oil broker PVM.
The latest snapshots of US oil supplies are expected to show a mixed picture, with gasoline and distillate stocks rising and crude inventories falling. The first of this week’s two US inventory reports, from the American Petroleum Institute, is due at 2130 GMT.