U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Friday but remained in a position to post a sixth week of gains, as the rollout of novel coronavirus vaccination programs fed hopes that demand for fuel would rebound next year.
Rally Fueled by Vaccine Optimism
Promising vaccine trials are helping to lift some of the worries associated with the record increases in the number of new COVID-19 infections and deaths around the world.
The U.K. began inoculations this week and the United States could start vaccinations as early as this weekend, while Canada on Wednesday approved its first vaccine with initial shots due from next week.
Outside advisers for the U.S. Food and Drug Administration have voted to endorse emergency use of Pfizer’s vaccine, paving the way for the agency to authorize its use to inoculate a nation that has lost more than 285,000 lives to COVID-19.
Still Plenty of Supply Available
A big jump in U.S. crude stockpiles last week served as a reminder that there is still plenty of supply available, but it was all but ignored as bulls ran through the market this week.
U.S oil stockpiles surged dramatically last recent week, with crude inventories jumping by more than 15 million barrels as imports surged and exports plunged, the Energy Information Administration said on Wednesday.
Crude inventories rose by 15.2 million barrels in the week to December 4 to 503.2 million barrels, the largest build in crude inventories since April, compared with analysts’ expectations in a Reuters poll for a 1.4 million-barrel drop.
Speculators are primarily focused on the coronavirus vaccine and ignoring the case and death numbers from COVID-19. Traders also appear to be ignoring the stalemate in Congress over coronavirus stimulus. Their feeling is “if not now, then later when President-elect Joe Biden takes office on January 20”.
They seem to be willing to ride out the storm as the economy continues to show signs of weakness. On Thursday, a report from the Labor Department showed weekly jobless claims jumped to 853,000, its highest point since September 19 and up from 716,000 in the previous week.
For a look at all of today’s economic events, check out our economic calendar.