Saturday, January 28, 2023

Crude Oil Falls as Grim Near-Term Outlook Dominates Vaccine Hopes By


© Reuters.

By Geoffrey Smith — Crude oil prices fell on Friday as traders booked profits on a rally fueled by hopes for a quick end to the pandemic, in the face of mounting evidence of fresh demand destruction in the near term.

By 10:45 AM ET (1545 GMT), futures were down 2.2% at $40.23 a barrel, but were still on course for their highest weekly close in four weeks, with a gain of around 9%. The international benchmark futures contract was also down by 1.8% at $42.76 a barrel.

Having priced in the news that Pfizer (NYSE:)’s vaccine candidate is effective, but not yet ready for approval or distribution, the market is in a new state of limbo, stuck between vaccine hopes and Covid-19 fears, analysts say.

“it’s no surprise that the market is trimming the price gains today as realities for crude supply and demand are grim, while daily new Covid-19 cases in the US are setting new records for the third-straight day,” said Bjornar Tonhaugen, head oil markets at Rystad Energy, in emailed comments. “The new infections offer limited the room for maneuver for governments hoping to reopen their economies sooner rather than later.”

The U.S. reported a new daily high of 153,000 new infections on Thursday, while hospitalizations also hit a new high and the seven-day average daily death rate rose above 1,000 for the first time since August. Johns Hopkins data now estimates over 244,000 U.S. fatalities from the disease. 

U.S. were down 3.3% at $1.11.85 a gallon, and have now given up more of their vaccine-driven gains than any other contract in the complex. Gasoline futures haven’t been helped by government data on Thursday that showed inventories of distillates still 14% above their five-year average last week. That suggests that stockpiles are still only declining slowly from their summer peaks. 

The situation in Europe is also challenging, with freeway operator Vinci reporting on Friday that traffic fell by 48% in the first full week of November in response to the government’s latest public health measures. Those measures in Europe’s second-largest economy are set to stay in place until December 1 at least. England is also in a state of semi-lockdown, while German Chancellor Angela Merkel warned on Friday that her government’s recent restrictions on social gatherings may have to last through the new year. 

On the brighter side, demand for refined products in India is now positive in year-on-year terms for the first time since the pandemic erupted, according to various newswire reports.


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