Oil Futures Rise as Traders Eye FDA's Vaccine Approval

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange followed equities higher in morning trade Thursday as traders shrug off bearish near-term market fundamentals and look towards an approval from U.S. Food and Drug Administration for the Pfizer/BioNTech vaccine expected later Thursday.

Near 7:30 a.m. ET, NYMEX January West Texas Intermediate futures advanced 66 cents to trade above $46 barrels (bbl) and the Brent contract on the Intercontinental Exchange gained 77 cents to $49.64 bbl. NYMEX January ULSD futures rallied more than 2 cents to $1.4202 gallon and January RBOB futures surged 2.45 cents to $1.3002 gallon.

Earlier this week, FDA signaled its support for granting Emergency Use Authorization for the coronavirus vaccine developed by Pfizer and BioNTech, which could lead to the vaccine's rollout as early as Friday. U.S. coronavirus daily cases surpassed 220,000 on Wednesday, with the death toll rising to above 3,200 as the viral spread accelerates into the holiday season.

U.S. equity futures point to a higher open on Wall Street ahead of weekly jobless claims at 8:30 a.m. ET and a policy announcement from the European Central Bank. Markets expect ECB to approve a â?¬500 billion expansion of the central bank's 1.35-billion-euro pandemic bond buying program, as well as a pledge to keep interest rates at near zero for the next two years.

U.S. jobless claims will likely show a weekly increase in initial unemployment applications to 724,000, up from 712,000 week prior, which could prompt action in negotiations on stimulus talks between House Speaker Nancy Pelosi and Senate Leader Mitch McConnell. The two leaders of the lower and upper chamber remain deadlocked in their positions on COVID-19 relief. The House passed a one-week extension that will keep federal agencies funded until Dec. 18 with the Senate expected to quickly approve, as negotiations over a relief bill continue.

Traders are looking past bearish data from the Energy Information Administration released Wednesday showing a 15.2 million bbl build in crude oil inventories during the week ended Dec. 4, the largest weekly increase since the week ended April 10, and lifted inventories to nearly 11% above the five-year average. The large build is being deemed as an anomaly, partly blamed on issues along the Houston Ship Channel that inflated import volumes and depressed export flow.

EIA data also showed gasoline inventories climbed 4.22 million bbl from the previous week to 237.86 million bbl and distillates stocks rose 5.22 million bbl to 151.09 million bbl. Demand for both refined fuels dropped sharply as some state and local governments across the United States are again restricting activity amid heightening COVID-19 infections, including reimposing lockdown measures.

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

Liubov Georges