Oil Advances After Tanker Explosion
(Bloomberg) -- Oil climbed past $47 a barrel after another tanker explosion in the Middle East raised concerns over the region’s stability and as the first Covid-19 vaccine was poised to be distributed across the U.S.
Futures rose 1.4% in New York after losing 0.5% on Friday. A ship was hit by an explosion at the Saudi Arabian port of Jeddah, with no casualties reported. It comes three weeks after an oil tanker was damaged in a possible attack at the Saudi terminal of Shuqaiq, highlighting the potential for supply to be disrupted.
First deliveries of the Pfizer Inc.-BioNTech SE vaccine will be made Monday after the drug gained emergency authorization last week, with President Donald Trump and other top officials being offered the shot as part of a plan to ensure continuity of government.
Oil in New York is up more than 30% since the end of October amid vaccine breakthroughs and an OPEC+ compromise deal on production, with global benchmark Brent topping $50 a barrel for the first time in nine months last week. Iran, meanwhile, plans to almost double output in the next year in anticipation of a loosening of sanctions after Joe Biden becomes president.
The tanker explosion “serves as a stark reminder of the potential for more meaningful disruptions should militant activity pick up,” said Stephen Innes, chief global strategist at Axi. “The rollout of the vaccine is going to have a positive effect on road fuel and eventually jet fuel demand.”
Tanker BW Rhine, which carries refined products, was struck by an external source while discharging at Jeddah at about 12:40 a.m. local time on Monday, according to a statement from ship-operating firm Hafnia, which owns BW Group. The Singapore-flagged vessel immediately ceased all discharge operations and the fire was extinguished without any injuries.
The dollar weakened, with the market also looking for progress on new stimulus in the U.S. A bipartisan group of lawmakers are set to unveil a $908 billion pandemic relief bill, although there’s no guarantee it will pass. Brexit talks were extended, meanwhile, raising hopes of a deal.
Brent’s prompt timespread was 10 cents a barrel in backwardation, a bullish market structure where near-dated contracts are more expensive than later dated ones. That compares with a 1 cent contango a week earlier.
All 50 U.S. states are expected to have the vaccine by Wednesday, with 2.9 million doses delivered in the first shipment. In general, the people to get the shot first will be health-care workers and vulnerable residents of care homes.
While parts of Asia have rebounded strongly from the virus-led crash and there are signs global demand is picking up after a November trough, the outbreak is continuing to dent consumption in some nations. South Korea is considering stricter social-distancing measures and Germany will enter a hard lockdown from Wednesday, which will last until at least Jan. 10.
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