Oil Futures Notch 3rd Weekly Gain on Optimism over Vaccine
WASHINGTON, D.C. (DTN) -- Oil futures nearest to delivery on the New York
Mercantile Exchange and Brent crude on the Intercontinental Exchange settled
Friday's session higher, with both crude benchmarks rising for the third week
in a row as investors look towards future gains in global oil demand spurred by
breakthrough development in two coronavirus vaccines that helped offset
downbeat sentiment over rising coronavirus infections and stalled fiscal
stimulus talks in Washington.
U.S. pharmaceutical giant Pfizer and its German partner BioNtech on Friday
formally requested Emergency Use Authorization for its BNT162b2 vaccine from
the U.S. Food and Drug Administration. The authorization if approved would
allow Pfizer to distribute 50 million doses as early as December before scaling
up to 20 billion doses next year.
Earlier this month, the company claimed its vaccine candidate proved to be
95% effective in blocking the virus, lifting hopes for an accelerated recovery
at some point next year. Most analysts warn however a genuine demand recovery
might still be six to twelve months away, and without fiscal stimulus to bridge
that gap the economy could take a sharp downturn.
U.S. daily coronavirus cases continued higher this week, topping 185,000
infections on Thursday, while deaths related to the virus surpassed a grim
milestone of 250,000. Center of Disease Control warned the death toll from the
virus could spike above 300,000 by mid-December, underscoring just how quickly
the health crisis has deepened is in the United States.
There are some signs the second wave of infections is now derailing the
fragile economic recovery in the United States, with weekly unemployment claims
increasing for the first time in six weeks and retail sales for October slowed
below expectations to 0.3% from 1.9% a month prior. JPMorgan expects the U.S.
economy to contract by 1% in the first quarter 2021 because of state and local
lockdowns amid the second wave of infections.
Adding to the uncertainty, Secretary of Treasury Steven Mnuchin this week
requested the Federal Reserve return $455 billion in unspent COVID emergency
funds which would shut down five emergency COVID-19 relief facilities, with the
move opposed by Fed Chairman Jerome Powell.
In March, Congress approved $2.2 trillion in emergency relief through the
CARES Act, which included $500 billion to set up a variety of emergency lending
facilities through the central bank to guarantee loans.
Senate Leader Mitch McConnell on Friday proposed unused Federal Reserve
funds to be put towards a targeted coronavirus relief bill, which would include
a second round of small business aid. The situation remains fluid.
NYMEX December West Texas Intermediate contract expired 41cts higher at
$42.15 bbl, with the January contract settling at a 27cts premium to the
expired contract at $42.42 bbl. ICE January Brent futures settled just below
$45 bbl at $44.96 bbl, up 76cts. NYMEX December ULSD futures firmed 1.56cts to
a fresh four-month spot high settlement at $1.2863 gallon, and December RBOB
futures added 1.27cts to settle at $1.1752 gallon.
Liubov Georges, 1.646.359.4088, email@example.com, www.dtn.com.
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