Oil Futures Up on Vaccine Rollout, Explosion at Saudi Port

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 powered higher early Monday, with the international crude benchmark trading above $50 per barrel (bbl) following an overnight explosion on an oil tanker while discharging at a Saudi Arabian port, and the beginning of a vaccination campaign against the coronavirus disease in the United States, buoying hopes that an end to the pandemic is in sight.

The United States has kicked off its vaccination program against COVID-19, with the first doses of the Pfizer/BioNtech vaccine shipped to all 50 states after federal authorities granted emergency use authorization on Saturday. The Centers for Disease Control voted over the weekend to recommend the vaccine for Americans age 16 and older for emergency use. A similar recommendation came on Friday from a Food and Drug Administration advisory panel.

Buoyed by risk-on sentiment, U.S. equities powered higher in pre-market trade Monday, with contracts tied to Dow Jones Industrials futures positioned for a 200-point gain at the opening bell and S&P 500 Index is priced for a 25-point bump. As risk appetite improves, the U.S. Dollar Index, which tracks the greenback against a basket of six global currencies, was last seen 0.49% lower at 90.525, trading near early December's 90.470 2-1/2 year low.

Near 7:30 a.m. ET, NYMEX January West Texas Intermediate futures advanced about 50 cents to trade at $47.05 bbl and the February Brent contract on ICE gained a like amount to $50.50 bbl. NYMEX January ULSD futures moved 1.6 cents higher to $1.4529 gallon and January RBOB futures climbed 1.10 cents to near $1.3190 gallon.

Oil traders are also monitoring the developing situation at the Saudi port of Jeddah where an oil tanker experienced an explosion after it was struck by an "external source," according to a statement from the ship's owner Hafnia. Tanker BW Rhine, a Singapore-flagged vessel, which carried distillate fuel from the Saudi port of Yanbu to Jeddah suffered no casualties, according to reports.

Houthis rebels have previously used sea mines to attack ships in Saudi waters and are thought to be behind the attack. A statement has not yet been released by Saudi officials.

A technical panel for Organization of the Petroleum Exporting Countries and allied producers is set to meet on Dec. 16 to review compliance with the group's joint production agreement. OPEC+ ministers are then scheduled to gather on Jan. 4 to study the market after their decision earlier this month to determine OPEC+ targets on a monthly basis, with any change limited to 500,000 barrels per day (bpd). OPEC+ production will increase 500,000 bpd starting Jan. 1, reducing their collective output cut to 7.2 million bpd.

Baker Hughes on Friday reported the number of oil rigs operating in the United States saw the largest one-week increase since January, up by 12 to 338, with the gains coming from the Permian -- up four, followed by the Eagle Ford -- up three, the Marcellus -- up two, and Niobrara and Utica, with each basin up one. The rig count has now increased for a third consecutive week through Dec. 11, bringing the total gain during the fourth quarter to 75.

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

Liubov Georges