Oil swung between gains and losses as the market weighed the outlook for demand as coronavirus vaccines begin. Futures in New York traded below $46 a barrel, driven by fluctuations in the dollar and equities. The U.K. issued its first Covid-19 vaccinations on Tuesday and there are signs that European demand is recovering after a renewed wave of lockdowns in the winter. Poland’s road use, for example, has climbed sharply since the start of last month.

Oil extends retreat from nine-month high amid surging virus

Oil is still near a nine-month high after surging last month amid optimism over vaccine breakthroughs and its trajectory over the next few months will depend on how quickly Covid-19 drugs can be deployed. In the near-term there are still ominous signs from the virus — the U.S. is now seeing hospitalizations rise by almost 2,000 a day and is averaging around as many deaths as during Covid-19’s first surge in April. France is poised to miss a goal to end its lockdown next week.

“We are confident that the weak demand will soon move back into the market’s focus,” said Eugen Weinberg, head of commodities research at Commerzbank AG. “The latest price rise has been driven by speculation.”

PRICES
  • West Texas Intermediate for January delivery fell 14 cents to $45.62 a barrel at 10:30 a.m. in London
  • Brent for February settlement dropped 15 cents to $48.64

The oil futures curve, meanwhile, is signaling a slight increase in negative sentiment. Brent’s prompt time spread has moved back into contango — where near-dated prices are cheaper than later-dated ones — after surging last week.