Oil rally stalls on signs of more supply, demand doubts

By Julia Payne LONDON (Reuters) - Oil slipped from seven-month highs on Thursday as signs of growing supplies helped to halt a rally driven by optimism that COVID-19 vaccines will revive fuel demand. Brent futures had risen to nearly $50 a barrel this week after three major pharmaceutical companies announced progress on vaccines that could start to be rolled out before the end of the year. But Brent was down 74 cents, or 1.5%, at $47.87 a barrel by 1650 GMT on Thursday, having dropped as much as $1.

Reuters November 27, 2020 00:06:34 IST
Oil rally stalls on signs of more supply, demand doubts

Oil rally stalls on signs of more supply demand doubts

By Julia Payne

LONDON (Reuters) - Oil slipped from seven-month highs on Thursday as signs of growing supplies helped to halt a rally driven by optimism that COVID-19 vaccines will revive fuel demand.

Brent futures had risen to nearly $50 a barrel this week after three major pharmaceutical companies announced progress on vaccines that could start to be rolled out before the end of the year.

But Brent was down 74 cents, or 1.5%, at $47.87 a barrel by 1650 GMT on Thursday, having dropped as much as $1. The contract gained about 1.6% in the previous session.

West Texas Intermediate (WTI) crude fell 66 cents, or 1.4%, to $45.05 after gaining 1.8% on Wednesday.

"Despite a number of strong fundamentals rallying the markets, especially vaccine development supporting oil, bearish concerns remain," said Avtar Sandu, senior commodities manager at Phillip Futures.

Lockdowns as the COVID-19 pandemic worsens, the rising number of rigs employed in the United States and increased production from Libya are risk factors for bulls, he said.

U.S. President-elect Joe Biden has urged people to forgo big family gatherings, wear protective masks and maintain social distancing for the Thanksgiving holiday. But Americans are defying pleas from officials to stay at home.

The United States has recorded 2.3 million new infections in the past two weeks.

While fuel demand has fallen with the second round of lockdowns, non-compliance has translated into a smaller than expected drop in European demand, Rystad Energy said.

"The restrictions currently imposed in Europe – had they been adhered to widely – should have resulted in a 20% to 30% drop in activity. Instead, as our real-time measurements show, we observe a drop of only around 12%," Rystad said in a note.

Investors also await next week's OPEC meeting.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia are leaning towards delaying next year's planned increase in oil output to help the market weather the COVID-19 second wave and rising Libyan output, three sources close to OPEC+ said.

"Tomorrow traders will start positioning themselves for next week's OPEC+ meeting. The consensus among analysts is a three-month extension of the current ceiling, anything less than that will trigger a sharp sell-off," said Tamas Varga, analyst at PVM Oil Associates.

(Reporting by Julia Payne in London and Aaron Sheldrick in Tokyo; additional reporting by Rod Nickel in Winnipeg; Editing by Barbara Lewis, David Goodman and Diane Craft)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.