Crude oil market reacts to vaccine news and upcoming US inventories data
- Vaccination against COVID-19 began today in the UK.
- Crude oil prices have extended losses for the second day this week amid high coronavirus cases.
- Investors are keeping an eye on tomorrow's data on US crude oil inventories.
Crude oil prices have extended this week’s losses. WTI is down by 0.33% to trade at $45.47. At the same time, Brent has fallen by 0.14% to $48.52. The continued vaccination-induced optimism has maintained the benchmark oils above the $45 and $48 psychological price levels respectively. However, the upsurge in COVID-19 cases is impacting the market. Investors are looking forward to the upcoming data on U.S. crude oil inventories.
Crude oil is in a virus valley
The crude oil market has been feeling the impact of the vaccine optimism and the virus-induced pessimism in equal measures. On the one hand, Brent and WTI are still above the $48 and $45 psychological price level respectively. The buoyancy is largely due to the positive market sentiment, triggered by news on coronavirus vaccination.
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Vaccination has begun in the United Kingdom. Margaret Keenan, a 90-year-old lady, was the first person to be vaccinated. She received the injection at 06.31 GMT on 8th December.
According to NHS providers’ deputy chief executive, Saffron Cordery, 50 hospitals within England have received the coronavirus vaccine. The world is watching keenly on how the country handles the logistics challenges.
The UK became the first country to authorize the coronavirus vaccine. Its priority list includes the eldery, frontline social and healthcare workers, and those whose health conditions places them at a high risk of serious disease.
In the US, Pfizer began shipping its vaccine from Brussels to Chicago on 27th November. The move is in readiness of FDA’ expected approval on 10th December. The positive vaccine news from the UK and US have offered support to crude oil prices.
On the other hand, the surge in coronavirus cases has been of concern to investors interested in trading oil. The US has set a new record of COVID-19 deaths over the past seven days. Previously, the country hit the peak of coronavirus-related demises on April 17 at 2,232 individuals. The current high is now 2,249 deaths. On 7th December, the country recorded about 200,000 new cases.
While European countries are cautiously easing lockdown measures, the number of cases is still relatively high. On 7th December, Germany recorded about 15,000 new cases. On the same day, Italy, UK, and Russia had 13,720, 14,718, and 28,142 additional cases respectively. The figures are an indication that the continent is not out of the woods yet.
During this Christmas period, policymakers are keen not to lift the restrictions hastily. The status quo in Europe and US have negatively impacted the demand for crude oil.
Investors to keep an eye on US crude oil inventories
Later today, the crude oil market will further react to the data from the American Petroleum Institute on last week’s crude oil stock. The last press release indicated a supply build as the oil stock increased by 4.146 million barrels compared to the prior week’s upsurge of 3.800 million barrels. Analysts had predicted a change of -2.272 million barrels.
Furthermore, the Energy Information Administration (EIA) will release data on the U.S. crude oil inventories on Wednesday. In the last release, the amount of crude oil in storage had changed by -0.679 million barrels. Experts expect a reading of -1.514 million barrels in tomorrow’s update.