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Oil Down, With Immediate COVID-19 Fears Overshadowing Vaccines Progress

·2 min read

By Gina Lee

Investing.com – Oil was down Thursday morning in Asia, as an eventful year for the black liquid draws to a close.

Brent oil futures fell 0.37% to $51.44 by 10:43 PM ET (3:43 AM GMT) and WTI futures were down 0.35% to $48.22.

The COVID-19 pandemic, and the ensuing strict lockdowns, saw around a fifth of global crude oil markets’ value wiped out in 2020 and a shock maiden venture into negative territory for WTI futures in April, as fuel demand tanked.

However, unprecedented stimulus measures from governments globally have helped prices rebound from these lows, with both Brent and WTI futures more than doubling from the decade-lows seen in the first quarter of the year.

A bright spot for investors ahead of the turning of the year was better-than expected U.S. crude oil supply data. The data, released on Wednesday by the U.S. Energy Information Administration (EIA), showed a draw of 6.065 million barrels in supplies for the week to December 25.

The draw was much bigger than the 2.583-million-barrel draw in forecasts prepared by Investing.com as the 562,000-barrel draw seen during the previous week.

The EIA data follows Tuesday’s crude oil supply data from the American Petroleum Institute, which showed a draw of 4.785 million barrels.

Meanwhile, a third vaccine has gained regulatory approval. AZD1222, developed by AstraZeneca PLC (LON:AZN) and the University of Oxford, won approval from the U.K.’s Medicines and Healthcare products Regulatory Agency on Wednesday for emergency supply and active immunization of individuals 18 years or older. This adds a third vaccine to governments’ arsenal, following regulatory approvals for Pfizer Inc (NYSE:PFE) and BioNTech SE's (F:22UAy) vaccine BNT162b2, as well as Moderna Inc's (NASDAQ:MRNA) mRNA-1273 vaccine, earlier in the month.

In Asia, China approved BBIBP-CorV, one of the two COVID-19 vaccines by China National Biotec Group.

However, immediate fuel demand concerns over the spread of the new B177 strain of the COVID-19 virus and the ensuing lockdowns put a damper on investor sentiment.

Supply-wise, data from Baker Hughes showed that U.S. energy firms this week added three oil and natural gas rigs in the best quarter for boosting the rig count since the second quarter of 2017.

The Organization of the Petroleum Exporting Countries and allies, or OPEC+, will ring in the new year with a series of meetings to discuss easing current production cuts.

The cartel’s Joint Technical Committee and the Joint Ministerial Monitoring Committee will meet on Jan. 3 and 4 respectively, with the 13th OPEC and non-OPEC Ministerial Meeting scheduled for Jan. 4. Current production cuts are set to ease by 500,000 barrels per day in January.

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