Oil is poised for a third weekly gain in New York as positive Covid-19 vaccine developments outweighed concerns about more restrictions stemming from a global surge in infections. Futures are back near $42 a barrel and set for the longest run of weekly gains since August following news of another vaccine breakthrough on Monday. Optimism around a vaccine offset a grim picture emerging across the U.S. with Americans urged not to travel for Thanksgiving, California ordering a one-month curfew and New York closing public schools.
Shrinking timespreads, meanwhile, are signaling concerns about over-supply are easing. The three-month timespread for Brent crude in London was 46 cents a barrel in contango, the narrowest since July.
Still, the oil market is facing an uncertain demand recovery, with a resurgent virus in the U.S. and Europe prompting tighter restrictions and keeping consumption in check, even as parts of Asia rebound strongly. The flaring outbreak will be a key issue for OPEC+ when it meets at the end of the month to decide on whether to delay a planned easing of cuts early next year.
“The vaccine news supports our view that world oil demand will move higher over the course of 2021,” said Victor Shum, vice president of energy consulting at IHS Markit. “There is promise of a better time, but the immediate future is grim. There is an alarming rate of new Covid-19 cases in North America and Europe.”
PRICES
West Texas Intermediate for December delivery, which expires Friday, fell 3 cents to $41.71 a barrel on the New York Mercantile Exchange
Front-month prices are up about 4% this week
More-active January futures slid 10 cents to $41.80 as of 7:45 a.m. London time
Brent for January settlement lost 4 cents to $44.16 on the ICE Futures Europe exchange after losing 0.3% in the previous session
