On December 11, 2021, oil extended gains as Brent added profits to top $50 for the first time since March. The rollout of COVID vaccination programs increased hopes that demand for fuel would rebound in the coming year.
Brent oil was up by 30 cents, which translates to about 0.6% to trade at $50.55 per barrel by 0752 GMT. The slight uptick adds to the nearly 3% that the market gained on December 10. United States oil was up by 31 cents or about 0.7% to trade at $47.09 per barrel after also gaining nearly 3% in the previous session.
The benchmarks are set for a 6th continuous week of gains as the promising vaccine trials helped beat the gloom over record increases in the rate of new infections and deaths throughout the world due to the health crisis.
Notably, the UK started inoculations earlier in the week, and the US may start vaccinations as early as the coming weekend. On December 9, Canada approved its first vaccine with initial shots expected to become available sometime next week. A senior market analyst at OANDA, Edward Moya, said:
“Crude prices are surging in anticipation of the FDA’s potential approval of Pfizer’s vaccine, as Asia’s economic recovery is making Chinese and Indian refiners acquire more oil.”
External advisers for the U.S. Food and Drug Administration (FDA) have already voted to endorse the emergency use of Pfizer’s vaccine. That has paved the way for the agency to authorize its use to inoculate a nation that has lost over 285,000 lives to COVID-19.
Oil Demand Is Rising
A spike in the United States crude stockpiles served as a significant reminder that there is still a lot of supply available. However, all that was ignored as the bulls ran via the market this week.
They were quite encouraged by signs that Asian demand is strong, with India’s largest refiner stating that it was already operating at 100% capacity of all its nine units for the first time since early in the year. Moya said:
“It seems the impending lockdowns across the U.S. and the potential hit to crude demand is being compensated by improving trends across Brazil, the UK, and most of Asia.”