By Barani Krishnan
Investing.com – The oil bull has gone on full blinker-on mode.
Crude prices settled up on Monday despite the Organization of the Petroleum Exporting Countries, or OPEC, cutting its forecast for 2021 growth in oil demand, citing “uncertainty surrounding the impact of Covid-19 and the labor market” on the outlook for transportation fuel in developed economies during the first half of next year.
Oil markets initially dipped after OPEC pared its forecast for world oil-demand growth to 5.9 million barrels a day, down 350,000 barrels a day from its previous projection. In its monthly report, the producer group pegged 2020 oil demand at 89.99 million barrels a day, a decline of 9.77 million barrels a day from 2019 and slightly below its previous estimate.
But by settlement, all sense of caution in crude was cast to the wind as bulls chased the promise of U.S. vaccine rollouts despite surging real-time Covid-19 case counts and New York City’s threat to return to full lockdown.
New York-traded , the leading indicator for U.S. crude, settled up 42 cents, or 0.9%, at $46.99 per barrel, after briefly visiting a session low of $45.70.
London-traded , the global benchmark for crude, finished Friday’s trade up 32 cents, or 0.6%, at $50.29 per barrel.
Oil bulls also pushed the market up earlier in the day on reports of a fuel transport ship being struck at a Saudi port, although the incident itself had no impact on fuel shipments.
And both WTI and Brent remained up in post-settlement trade despite Wall Street’s and indexes ending the day solidly in red after an earlier rally, as equity market investors reacted to mixed messaging between the vaccine program and death and hospitalization statistics from the virus. Congress’ inability to reach immediate agreement on a fiscal rescue package for the Covid-19 also weighed on most markets.
Analysts said the crude rally appears to be overstaying its welcome.
“In the short-term, crude prices are likely to be weighed down as vaccine rollouts slowly happen and as the holiday surges will keep large parts of the U.S. and European economies in lockdown mode,” said Ed Moya of New York-based OANDA.
Oil prices have been on a tear over the past six weeks, gaining as much as $13 per barrel, on bets that people across the world might soon be able to travel freely as millions of doses of coronavirus vaccines were being prepared for delivery over the course of the next few weeks, after approval by relevant health authorities.
The rally also ignored a huge build in domestic , and reported by the U.S. government for the week ended Dec 4.
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by : Investing.com