Oil rises, as investors focus on vaccine rollout, brush off recovery concerns

Oil prices rose on Tuesday as investors focused on the rollout of COVID-19 vaccines, looking past tightening lockdowns in Europe and forecasts for a slower-than-expected recovery in fuel demand.

Brent crude settled at $50.76 a barrel, rising 47 cents, or 0.9%. U.S. West Texas Intermediate (WTI) crude settled at $47.62 a barrel, gaining 1.3%, or 63 cents.

The United States began vaccinating people on Monday as the country’s COVID-19 death toll crossed the 300,000 mark. Britain and Canada have also begun to administer shots.

“The crude market continues to seize upon the future outlook of the post-pandemic period, which could be as soon as next summer,” said John Kilduff, partner at Again Capital in New York.

Crude oil throughput rose by 3.2% year-over-year in China in November，a record. That helped investor sentiment about coming increases in fuel demand, said Phil Flynn, senior analyst at Price Futures Group in Chicago. China has been one of the rare countries where oil demand has fully recovered from earlier this year.

“People would assume that the oil demand surge is right around the corner,” Flynn said.

Still, the International Energy Agency said on Tuesday any impact of vaccines on demand is still several months away, while OPEC said on Monday oil demand will rise more slowly than expected. [IEA/M] [OPEC/M]

Brent hit $51.06 on Dec. 10, highest since March, supported by vaccine approvals, even as the infection rate has surged in most regions worldwide.

London stepped up pandemic rules requiring bars and restaurants to close, Italy is considering more stringent steps over Christmas, and Germany is likely to be under lockdown until early 2021.

The latest snapshots of U.S. oil supplies are expected to show gasoline and distillate stocks rising and crude inventories falling. [EIA/S]

The first of this week’s two U.S. inventory reports, from the American Petroleum Institute, was due at 4:30 p.m. EST (2130 GMT). Official government data was scheduled for Wednesday.
Source: Reuters (reporting by Laila Kearney; Additional reporting by Alex Lawler, Sonali Paul and Shu Zhang; Editing by Alexandra Hudson, David Gregorio and Mark Heinrich)