Oil prices climbed back to nearly the $50 per barrel mark, as the news about the massive vaccination process in Britain lifted investors’ hopes for a speedy recovery in oil demand. Also, a weaker dollar, the currency under oil is traded, helped the prices uplifting as it hit two years and a half lows.
Brent gained 51 cents, 1% and closed at $49,35 per barrel, while the West Texas Intermediate climbed 51 cents, also 1%, to $49,35. A significant gain compared to the misstep of last Monday.
According to news agency Reuters, the U.S. dollar fell this Wednesday as the vaccine news boosts risk appetite and increases the chance of a U.S. fiscal stimulus, as negotiations progress over the continued risk of the pandemic, reaching new records of contagion.
“The U.S. dollar index futures curve has dropped by nearly 13% since 15 March 2020; when international investors flocked to the greenback as a safe haven; a weaker dollar in the short-term is a boon for oil prices,” said Rystad Energy analyst, quoted by Reuters.
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Oil amid the vaccine and covid’s second wave
As a massive vaccination process started in Britain this week, investors and market watchers expect that soon the pandemic will be held, and a speedy oil demand recovery would start.
Also, vaccine news help to dissipate fears over the “second wave” of the illness that has got South Korea, Europe and the U.S. with stricter social distancing measures, and even new lockdowns. “The worsening COVID situation, in particular in Europe, is weighing on prices,” research firm JBC Energy told Reuters.
Today’s rally on prices happened despite the build-up in U.S. gasoline and distillate stocks; that have risen by 1,14 million barrels, against the draw expected by analysts and forecasts of 1,42 million barrels.
The American Petroleum Institute released the news on Tuesday, and it is expected to be confirmed later on Wednesday by the Energy Information Administration. On the supply side, the agency expects the U.S production to drop by 240,000 barrels per day to 11,10 million barrels per day. A smaller decline than its previous forecast of 290,000.