Oil Futures Climb on Bullish APIs, AstraZeneca Vaccine OK

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and the Brent contact on the Intercontinental Exchange continued higher in early trade Wednesday after data from the American Petroleum Institute showed across-the-board draws from U.S. commercial crude and refined products supplies, while Britain's approval of a third vaccine developed by Oxford's University and AstraZeneca boosted expectations for a faster recovery in global oil demand.

In early trading, NYMEX February West Texas Intermediate futures advanced $0.47 to $48.45 per barrel (bbl), and ICE February Brent added $0.39 to trade near $51.50 bbl ahead of the contract's expiration Wednesday afternoon. March Brent futures traded with a $0.17 premium against the expiring contract. NYMEX January ULSD futures gained 1.21 cents to trade near $1.4989 gallon ahead of expiration Thursday, with the February contract holding near parity. NYMEX January RBOB futures climbed 1.38 cents to $1.4017 gallon ahead of expiration later this week, with February delivery at a 1.14-cent contango.

Early Wednesday, UK health officials gave a nod to the AstraZeneca and Oxford vaccine, with the government reportedly ordering over 100 million doses of this low-cost treatment -- enough to vaccine three-quarters of the country's population. AstraZeneca vaccine could be easily stored and transported in normal refrigerated temperatures using "existing healthcare settings" which makes it a more viable option for some developing nations. The approval of the third vaccine comes as Britain battles a fresh wave of COVID-19 infections triggered by a new variant of the coronavirus which has already been detected in over 17 countries. On Tuesday, the United States confirmed its first case of the new coronavirus strain that is believed to be more transmittable.

The number of coronavirus infections in the United States continues to tick higher, prompting tighter restrictions of contact-sensitive businesses and travel. Based on seven-day average using John Hopkins data, the country posted at least 180,905 new COVID-19 infections each day last week, resulting in over 2,000 virus-related deaths.

Oil futures' move higher also follows inventory data from the American Petroleum Institute which showed a larger-than-expected draw in domestic crude supplies and unexpected declines in product inventories during the week-ended Dec. 25. The industry group reported a 4.785 million bbl decline in commercial crude stocks, more than double expectations for a 2.06 million bbl draw. Crude stocks at the Cushing supply hub in Oklahoma increased 131,000 bbl during the week. U.S. gasoline supply was drawn down 718,000 bbl from the previous week, while the market having estimated a 1 million bbl build in commercial inventory. For distillate stocks, API reported a 1.877 million bbl drawdown from inventory with the market anticipating a 700,000 bbl build.

Traders now await official inventory data from the U.S. Energy Information Administration due out at 10:30 a.m. ET.

In broader markets, equity futures on Wall Street continued higher and the U.S. dollar index extended its recent decline after U.S. Senate Majority Leader Mitch McConnell introduced on Tuesday a competing stimulus bill that would increase the size of the payment checks to $2,000, repeal Section 230 and set up a commission to study election fraud.

"Those are the three important subjects the president has linked together," McConnell said. "This week the Senate will begin a process to bring these three priorities into focus."

As the battle for $2,000 stimulus check continues, U.S. Treasury Secretary Steven Mnuchin tweeted late Tuesday that $600 stimulus payments will start going out to eligible Americans this week.

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

Liubov Georges