Oil dips, heads for weekly gain as vaccine rollouts support

Covid-19 relief bill likely to continue to fuel bullish momentum

LONDON:

Oil dipped towards $51 a barrel on Friday though still headed for a seventh weekly gain in a row as investors focused on the rollout of Covid-19 vaccines and looked past rising case numbers and tighter lockdowns in Europe.

Pfizer has applied for approval in Japan for its vaccine, which is being used in the United Kingdom and the United States. The US Food and Drug Administration is also working towards approving Moderna’s shot.

Brent crude was down $0.22, or 0.4%, at $51.28 at 1118 GMT, near the nine-month high of $51.90 hit on Thursday. US West Texas Intermediate (WTI) crude, which also reached its highest since March on Thursday, fell $0.12, or 0.3%, to reach $48.24.

“Bullish momentum is taking a breather,” said Stephen Brennock of oil broker PVM. “Looking ahead, oil prices should continue to find support from the prospect of a Covid relief bill and accelerating vaccine rollouts.”

US lawmakers are trying to agree a coronavirus relief package but a new potential roadblock emerged as some Senate Republicans insisted on language ensuring that expiring Federal Reserve lending programmes cannot be revived.

While the vaccines offer hope, surging case numbers in major economies and new movement restrictions in Europe are impacting the immediate prospects for oil demand. The number of US cases rose by at least 239,018 on Thursday.

Oil gained support this week from weekly US supply data showing crude inventories fell by 3.1 million barrels, more than the drop analysts had expected.

The Organisation of the Petroleum Exporting Countries and allies, known as OPEC+, are supporting market prices by slowing the pace of a planned increase in supplies next year.

OPEC+ plans to add 500,000 barrels per day of supply in January and will meet in early January to decide on next steps.