WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange continued higher in early trade Tuesday, with the U.S. crude benchmark trading at the highest level since early March as markets look to a de-escalation of political tensions in the United States after President Donald Trump agreed to begin the transition to a Biden administration while three coronavirus vaccination programs are set to move to the distribution phase next month.
U.S. equity futures are signaling another rally is on tap Tuesday, with contracts tied to Dow Jones Industrials surging 300 points and the S&P 500 Index is up 0.56% as investors cheer what is now seen as a smooth transition to a Biden administration and the prospect for more economic stimulus. Reports indicate the Biden team is pushing for a quick, smaller rescue bill to be completed before the end of the year -- a proposal favored by the Senate Republican majority but opposed by Democratic leadership in the House.
U.S. economy has shown signs of a sharp downturn in recent weeks as consumer spending slowed below 1% and weekly unemployment claims began ticking higher amid renewed surge in coronavirus infections. Several emergency relief programs enacted earlier this year in the face of the coronavirus pandemic are set to expire at year's end.
Later Tuesday morning, investors will get a glimpse into consumer confidence for the final weeks of November, with expectations for the confidence index to decline to 98 from 100.9 in October. Conference Board is scheduled to release its monthly assessment of U.S. consumer confidence at 10 a.m. ET.
A weaker-than-expected reading could further pressure the U.S. dollar, which is trading just above Monday's 92 12-week low.
January West Texas Intermediate futures traded at a $43.74 per barrel (bbl) high on the spot continuous chart overnight, and ICE January Brent futures rallied to a $46.72 nearly nine-month spot high. NYMEX December ULSD futures surged to a fresh nearly nine-month high at $1.3388 gallon. December RBOB futures gained 2.5 cents to $1.2290 gallon.
Tuesday's sharp advance is fueled by increasing optimism over the successful vaccine development from three pharmaceutical companies in the United States and the United Kingdom. Traders have raised their bets for a quicker recovery in global oil demand as major economies in the West, including the United States, Germany and France announced nationwide vaccination programs to begin next month.
In the United States, COVID-19 vaccines could become available as early as Dec. 11, according to Dr. Moncef Slaoui, Chief Scientific advisor for "Operation Warp Speed," adding that each state will decide who they will vaccine first.
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