Brent Oil passed the key $50 a barrel threshold on Thursday, for the first time in nearly nine months, as hopes that an impending vaccine rollout will boost the global economy, fueled oil price rises.
Thursday’s surge in oil prices meant it was the first time Brent Oil hit $50 since oil prices crashed in the beginning of March.
Crude Oil prices surged along with Brent Oil, with both posting 3%+ gains. At the time of writing, Crude oil is up 3.03%, with a barrel trading at $46.90, its highest since the March crash. Brent Oil is up 3.09%, with a barrel trading at $50.37.
As Covid-19 vaccines are being deployed in the U.K, there is growing anticipation and optimism over the FDA’s potential approval of Pfizer’s vaccine in the US. This week also saw Canada approve the Pfizer-BioNTech COVID-19 vaccine.
Oil Investors Bullish Despite Supply Concerns
Despite infection rates rising in the US, a lockdown in the UK and much of Europe teetering on the brink of a new lockdown, hopes of quicker-than-expected vaccine rollout fueled bullish expectations of increasing oil demand early next year, as economies get back on track.
Thursday’s gains in Oil Gains come despite key indicators pointing to losses. Earlier this week, the Energy Information Administration reported a huge crude oil inventory build-up. U.S. commercial crude oil inventories increased by 15.2 million barrels from the previous week. To provide some context as to the magnitude of the figures, analysts’ expectations were for a 1.42 million-barrel drawdown instead.
The EIA information also revealed rather tellingly that Jet fuel product supplied was down 34.9% compared with the same time last year. With air travel limited across many countries, the number is expected to decrease further into early 2021 at least.
However, investors appear to be ignoring supply concerns for now and focusing on hopes of a global economic recovery fueling demand. The economic recovery in China is spreading across Asia.
Indian Oil Corp, the largest oil refiner in India and the world’s third-largest oil importer, said its refineries operated at 100-percent capacity in November. This was for the first time it has operated at 100-percent capacity since the pandemic started, as domestic fuel demand increases.
