WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange rallied in early trade Tuesday, with gains spurred by surging equities and a weaker U.S. dollar after European leaders agreed on a historic 1.85 trillion budget to support the block's economy, while positive results from early stage vaccine trials for the coronavirus disease further boosted the sentiment.
Ahead of expiration Tuesday afternoon, NYMEX West Texas Intermediate futures for August rose $1.15 to trade near $42 per barrel (bbl), with the next-month WTI contract expanding its premium to 0.12 cents. International crude benchmark Brent traded at $44.53 bbl, gaining $1.26 in overnight trade. NYMEX ULSD August futures moved 3.80 cents higher at $1.2735 gallon and the front month RBOB contract rallied 4.50 cents or 3.5% to trade near $1.2730 gallon.
The U.S. dollar dropped down to a near four-month low 95.605 against the basket of foreign currencies and global stocks rallied as investors cheered the new stimulus bill from the European Union and a potential breakthrough on coronavirus vaccine. Oxford University/AstraZeneca said Monday their coronavirus vaccine produced anti-bodies and T-cells that can train the immune system to fight coronavirus for an extended period of time.
The immune system has two ways of finding and attacking pathogens antibody and T cell responses, Oxford professor Andrew Pollard said in a release. This vaccine is intended to induce both. We hope this means the immune system will remember the virus, so that our vaccine will protect people for an extended period.
The positive vaccine trials reignited hopes for a stronger economic growth in the second half of the year that would spur demand for oil and refined products. Russian Energy Minister Alexander Novak estimates global oil demand in August will be 10% below the pre-crisis levels, a significant improvement from a 25% plunge back in April.
Further aiding the sentiment, European leaders reached a deal on Tuesday to unleash a landmark stimulus package that would fuel the eurozone's economic recovery. The deal includes a 1.85 trillion budget and stimulus package that will cover the next six years of the bloc's spending priorities.
Meanwhile, lawmakers at the Capitol Hill are set to meet with aides of President Donald Trump later Tuesday to work out a potential deal on a stimulus package for the U.S. economy. Supplemental unemployment benefits, which are protecting more than 30 million Americans that are still out of work as a result of the coronavirus pandemic, are set to run out at the end of next week.
Liubov Georges can be reached at email@example.com
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