Oil prices slip as surging COVID-19 cases overshadow vaccine hopes

FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County
FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant/File Photo

November 19, 2020

By Yuka Obayashi

TOKYO (Reuters) – U.S. crude futures fell in early trade on Thursday, giving up some of gains from the previous day as surging COVID-19 cases and widening lockdowns raised fears over fuel demand, offsetting further upbeat vaccine news.

U.S. West Texas Intermediate (WTI) crude <CLc1> futures were down 39 cents, or 0.9%, to $41.43 a barrel by 0039 GMT, after gaining nearly 1% on Wednesday. Brent crude <LCOc1> was yet to trade, having risen 1.4% on Wednesday.

“The spread of coronavirus infection and fresh restrictions in the United States and other parts of the world hit market sentiment as it would hamper fuel demand,” said Kazuhiko Saito, chief analyst at Fujitomi Co.

“Investors are also booking profits from the recent rally before the U.S. Thanksgiving holiday later this month,” he said.

The U.S. death toll from COVID-19 approached 250,000, as New York Mayor Bill de Blasio announced the country’s largest school district will halt in-person learning in the latest major restriction to curb soaring COVID-19 infections.

Daily coronavirus cases in Tokyo and South Korea hit fresh highs, as pollution-cloaked New Delhi struggled with rising cases and Australia reported a highly contagious virus strain which forced a state-wide lockdown.

Worries about coronavirus-related economic damage took over vaccine optimism stoked by the announcement by Pfizer <PFE.N> and BioNTech <22UAy.DE> that they could secure emergency U.S. and European authorization for their COVID-19 vaccine next month after final trial results showed it had a 95% success rate and no serious side effects.

On the upside, the U.S. crude inventories <USOILC=ECI> rose 768,000 barrels last week, less than analyst expectations in a Reuters poll for a 1.7 million-barrel rise, government data showed. Distillate stockpiles, which include diesel and heating oil, fell by 5.2 million barrels, far exceeding expectations. [EIA/S]

“Still, lingering worries over a global supply glut, especially with the COVID-19-hit economies, will likely limit upside of oil prices,” Fujitomi’s Saito said, predicting WTI to be traded between $40 and $42 a barrel until the OPEC+ meeting later this month.

OPEC+, comprising the Organization of the Petroleum Exporting Countries, Russia and other producers, is due to discuss policy at a full ministerial meeting to be held on Nov. 30 and Dec. 1.

(Editing by Michael Perry)

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