WASHINGTON (DTN) -- Following equity markets higher, oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange posted solid gains in afternoon trade Thursday. Futures were underpinned by heightened optimism that deeper government spending would be agreed to in a relief package for citizens and small businesses reeling from the pandemic and repeated government lockdowns, while pharmaceutical companies scale up distribution of coronavirus vaccines in the United States and globally.
Further boosting the oil complex, U.S. dollar index continued its slide to a better than 2 1/2-year low 89.640 on Thursday a day after the Federal Reserve reinforced its commitment to support markets with asset purchases. Simultaneously, the Federal Open Market Committee revised higher its expectations for the U.S. economy next year, forecasting annualized growth of 4.2% and for the unemployment rate to decline to 5.2% by the end of 2021.
In the short term, however, U.S. labor market continues to sustain heavy damage from the raging pandemic that killed over 3,500 Americans in a single day Wednesday, according to data from John Hopkins University. Unsurprisingly, the number of Americans filing for first-time unemployment benefits over the past month have been trending higher, reaching 885,000 new applications last week -- the highest weekly rate in over three months.
Against this backdrop, markets anxiously look for Congressional leaders to pass a relief package for millions of American businesses and individuals that are about to lose benefits. Reports suggest Republican and Democratic leaders are inching closer toward a $900 billion relief package, which would include $600 checks to most Americans. The measure is also expected to include an additional $300 a week in jobless benefits as well as up to $330 billion for small business loans and money for vaccine distribution.
Senate Majority Leader Mitch McConnell, speaking on the Senate floor Thursday, said he believes a "bipartisan, bicameral agreement appears to be close at hand. I am encouraged that our Democratic colleagues have now embraced this framework, that's been the right solution for our country all this time."
U.S. Food and Drug Administration on Thursday is expected to grant Emergency Use Authorization for the second coronavirus vaccine developed by Moderna, with the company aiming to distribute an initial six million doses domestically as early as next week. Approval would mark the second vaccine authorized for emergency use in the United States, following one developed by Pfizer. Meanwhile, Pfizer said Thursday the company manufactures millions of doses each day and remain confident in its ability to deliver up to 50 million doses globally this year and up to 1.3 billion next year.
"We are not having any production issues with COVID vaccine," the company said in a statement.
On Friday, Pfizer is set to apply for approval for its COVID-19 vaccine in Japan.
On the session, NYMEX January West Texas Intermediate futures gained 54 cents to settle at $48.36 per barrel (bbl), and Brent crude for February delivery advanced 42 cents to $51.50. The front-month ULSD contact added 1.75 cents to $1.4952 per gallon and January RBOB futures surged 3.52 cents or 2.7% to settle at a $1.3881-per-gallon 10-month spot high.
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