Oil Futures Flat as UK Rolls out Vaccine, China Oil Imports

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange moved shallowly mixed early Tuesday as traders monitored the rollout of COVID-19 vaccination programs beginning Tuesday in the United Kingdom and possibly in the United States by the end of this week, while a strong rebound in China's crude imports suggests an ongoing recovery in Asia's largest economy, spurring hopes for stronger global demand growth post-pandemic.

China's crude oil imports in November spiked 10.1% from October to 11.08 million barrels per day (bpd) but remained 0.8% lower than the 11.18 million bpd of inflows a year ago, according to data released by China's General Administration of Customs. China's economy continues to gain momentum in the current quarter, helped by mitigation efforts to control the viral spread and strong export shipments to the United States and Europe for the Christmas season sales. November's exports jumped a whopping 21.1% year on year, marking the fastest growth since 2018. As China's appetite for crude oil grows, Saudi state oil giant Aramco raised its official selling price to Asia by 80cts for January deliveries, while lowering it for the United States and western Europe.

The UK on Tuesday began its vaccination program for the first doses of Pfizer and BioNTech's coronavirus vaccine, while U.S. vaccinations could start as soon as Friday, according to James Hildreth, a member of vaccine advisory committee. Hildreth told NBC News that if the panel approves the Pfizer vaccine on Thursday, the U.S. Food and Drug Administration could give emergency approval that day. The panel will review the Moderna coronavirus vaccine on Dec. 17.

Even as hopes for a speedy and effective vaccine supports prices, short-term fundamentals don't look good for major economies in the Western Hemisphere where demand has been hammered by surging COVID-19 cases and accelerated lockdowns.

California, the largest U.S. market for gasoline consumption, on Sunday entered a three-week lockdown, restricting movement for approximately 85% of its 40 million residents and shuttering nonessential businesses. Gasoline supplied to the U.S. market already fell to its lowest in five months at 7.973 million bpd during the Thanksgiving holiday week. With lockdown measures accelerating sharply across the United States, traders anticipate global fuel consumption to erode further heading into year's end, pressuring front-month oil contracts.

In early activity, U.S. benchmark for January delivery slipped 15 cents to $45.60 barrel (bbl) and ICE February Brent futures traded near $48.65 bbl. NYMEX January ULSD futures gained fractionally to $1.4000 gallon, while the January RBOB contract edged higher to $1.2585 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com

Liubov Georges