Oil dips as COVID cases and lockdowns outweigh vaccination

LONDON: Oil prices fell on Tuesday, extending the previous session’s losses after California tightened its pandemic lockdown through Christmas and coronavirus cases surged in the United States and Europe.
Brent crude futures fell 18 cents, or 0.4%, to $48.61 a barrel by 1314 GMT, while U.S. West Texas Intermediate (WTI) crude futures lost 29 cents or 0.6%, to $45.47. Both benchmarks retreated by about 1% on Monday.
Oil prices were briefly buoyed after the world’s first fully-tested COVID-19 vaccine shot was administered to a grandmother in Britain, but investors quickly returned their focus to ebbing fuel demand.
A sharp rise in coronavirus cases globally has led to a string of renewed lockdowns, including strict measures in California, Germany and South Korea.
“The pandemic situation is continuing to be very disruptive in quite a few places in the U.S. and parts of Europe. That’s impacting sentiment on demand near term,” said Lachlan Shaw, National Australia Bank’s head of commodity research.
France may have to delay unwinding some lockdown restrictions next week, government sources said, after signs the downward trend in new cases had flattened after shops were allowed to reopen late last month.
Analysts said they were closely watching U.S. lawmakers’ efforts to approve a new economic stimulus package needed to drive jobs growth and energy demand.
“As supply expectations are now firmer after the OPEC+ meeting, at least for January, prices are not expected to deviate much for a while and swings will be focused on ‘lighter’ market events, even if these are mostly of psychological value – such as the first vaccinations in the UK,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
The OPEC+ group of oil producers is likely to hold their next meeting on Jan. 4, after agreeing last week to raise oil output by 500,000 barrels per day (bpd) next month.
Data due from the American Petroleum Institute on Tuesday and from the U.S. government on Wednesday is expected to show that U.S. crude stocks fell last week while refined product stockpiles rose, according to estimates from five analysts polled by Reuters.