UPDATE 6-Oil rally stalls on signs of more supply, demand doubts
By Julia Payne
LONDON, Nov 26 (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 LCOc1 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. 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 CLc1 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. United States has recorded 2.3 million new infections in the past two weeks. 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. 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.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.
Vaccine hopes driving this rallyLike 0
Vaccinr hopes driving this rallyLike 0
Vaccine hopes dricing this rallyLike 0
Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb
Drop an image here or