Oil prices ease as rising COVID-19 cases outweigh vaccine optimism

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Oil futures eased on Thursday, surrendering some gains from the previous day as the surge in coronavirus cases and tighter economic restrictions around the globe stoked fears over slower fuel demand, outweighing upbeat vaccine news.

Brent crude futures LCOc1 shed 17 cents, or 0.4%, to $44.17 a barrel by 0345 GMT, after gaining 1.4% on the previous day. U.S. West Texas Intermediate crude CLc1 declined 29 cents, or 0.7%, to $41.53 a barrel, having risen nearly 1% on Wednesday.

“The spread of coronavirus infection and fresh restrictions in the United States and other parts of the world hit market sentiment as it would hamper fuel demand,” said Kazuhiko Saito, chief analyst at Fujitomi Co.

“Investors are also booking profits from the recent rally before the U.S. Thanksgiving holiday later this month,” he said.

The U.S. death toll from COVID-19 surpassed a grim new milestone of 250,000 lives lost on Wednesday, as New York City’s public school system, the nation’s largest, called a halt to in-classroom instruction, citing a jump in coronavirus infection rates.

Worries about coronavirus-related economic damage overshadowed upbeat news from Pfizer PFE.N and BioNTech 22UAy.DE that are seeking U.S. and European authorization for their COVID-19 vaccines next month.

“Weaker global equities amid growing worries over the surging pandemic also bolstered fears over slowing consumption and fuel demand,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

Asian shares eased from all-time highs on Thursday as widening COVID-19 restrictions in the United states weighed on Wall Street. [MKTS/GLOB]

Boosting worries about oversupply, Libya’s National Oil Corporation (NOC) and France’s Total TOTF.PA discussed NOC’s efforts to raise capacity and increase production rates to the highest levels.

Supporting prices, U.S. crude inventories USOILC=ECI rose 768,000 barrels last week, less than analyst expectations in a Reuters poll for a 1.7 million-barrel rise, government data showed. Distillate stockpiles, which include diesel and heating oil, fell by 5.2 million barrels, far exceeding expectations. [EIA/S]

“Still, lingering worries over a global supply glut, especially with the COVID-19-hit economies, will likely limit upside of oil prices,” Fujitomi’s Saito said, predicting WTI to be traded between $40 and $42 a barrel until the OPEC+ meeting later this month.

OPEC+, comprising the Organization of the Petroleum Exporting Countries, Russia and other producers, is due to discuss policy at a full ministerial meeting to be held on Nov. 30 and Dec. 1.

Members of OPEC+ are leaning towards delaying the current plan to boost output in January by 2 million barrels per day (bpd), sources have said.

Source: Punch

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