Global oil prices today pared some of their gains for the week as a vaccine-inspired rally ran out of steam.
Prices shot up at the beginning of the week on the news that Pfizer’s coronavirus vaccine was 90 per cent effective, but began to slip back yesterday.
Today global standard Brent crude fell a further 1.3 per cent to take it to $42.97, while US benchmark West Texas Intermediate shed 1.7 per cent.
However, both measures will end the week with a sizeable gain on market hopes that the vaccine could offer a way out of the current economic malaise sooner than expected.
Disappointing data from the US, which saw crude inventories increase by 4.3m barrels, also weighed on prices today.
In addition, record numbers of new coronavirus cases in the US especially have served as something of a reality check for markets.
And analysts from the International Energy Agency have also warned that oil demand is unlikely to get a substantial boost from a new vaccine until mid-2021.
“In essence, some of the feel-good factor from the Pfizer vaccine has worn off and disappointing EIA figures have created a bit of a downward correction,” Harry Tchilinguirian, head of commodity research at BNP Paribas, said.
Traders will be keeping a close eye on producer alliance Opec+’s meeting next week, which could see the group extend production curbs.
The alliance is set to increase production by 2m barrels per day from 1 January, but de facto leader Saudi Arabia has hinted that it might keep current curbs in place.
Head of oil markets Bjornar Tonhaugen said: For now, expect bearish pressures to dominate until OPEC+ officially lays its supply cards on the table, which could very well pave the way for a recovery in December as all smoke signals point to a 3-6 month extension of the current cuts.