Oil Up on Vaccine Rollout, Worries of Iraq Oilfield Attack

Oil prices were up on Thursday, buoyed by a COVID-19 vaccine rollout in Britain. Additionally, the imminent approval of a vaccine in the United States could spur a rebound in fuel demand. This is despite a large build in U.S. crude stocks last week.

At 0500 GMT US. West Texas Intermediate (WTI) crude futures gained 25 cents, or 0.6%, to $45.77 a barrel. Moreover, Brent crude futures rose 22 cents, or 0.5%, to $49.08 a barrel. Prices were slightly changed overnight.

In the United States, vaccinations could start this weekend. A panel of advisers will meet on Thursday to discuss the move. That’s whether to recommend to the Food and Drug Administration the emergency use authorization of the Pfizer/BioNTech vaccine.

ANZ analysts said in a note that a COVID-19 vaccine is a major turning point. One of its many benefits will be that it could draw a line under the decline in oil market demand. The oil market has suffered from government-imposed movement restrictions.

However, the analysts added, there are some hurdles before the oil market can assume the worst is over.  Many governments are currently increasing restrictions to curb a resurgent spread, while vaccine mass-production and distribution are worked out.

Furthermore, Canada approved its first COVID-19 vaccine on Wednesday. Inoculations would start next week, according to reports.

Iraq Oilfield Attack

Fears after two wells at a small oilfield in northern Iraq were set ablaze, also supported oil prices. The government called it a terrorist attack, though production was not affected.

According to ANZ analysts, while the wells were small, it has raised concerns of further disruptions.

They were surprised that the market had brushed aside an unexpectedly large build in U.S. crude stocks. This was in government data released on Wednesday. It was largely due to a plunge in U.S. crude exports to their lowest since 2018.

The Energy Information Administration said crude inventories rose by 15.2 million barrels in the week to Dec. 4. That’s when compared with analysts’ expectations in a poll for a 1.4 million -barrel drop.

The EIA cut its 2021 world oil demand growth forecast. On Tuesday, it was cut by 110,000 barrels per day to 5.78 million bpd.

Meanwhile, in precious metals, bullish gold investors would have been disappointed with gold’s overnight price action last night. 

Gold plunged by 1.60% to USD1840.00 an ounce, trading as low as USD1825.50 an ounce intra-day. 

The yellow metal moved lower again early in Asia but quickly regained those losses. It remained unchanged throughout the session.