Crude prices rose in mid-morning trade in Asia Nov. 16, as the market was comforted by the strong possibility that any new lockdowns in the US will be less severe than the nationwide lockdowns seen in spring, with the signing of the Regional Comprehensive Economic Partnership (RCEP) also providing a boost to sentiment. ICE Brent January crude futures were up 41 cents/b (0.96%) from the Nov. 13 settle at $43.19/b, while the NYMEX December light sweet crude contract was up 50 cents/b (1.25%) at $40.63/b.
January ICE Brent and December NYMEX crude futures surged 8.44% and 8.05% higher in the week ended Nov. 13 to settle at $42.78/b and $40.13/b, respectively, on reports of progress in the development of a COVID-19 vaccine.
Market analysts attributed the upward trajectory in oil prices this morning to rising hopes that if any lockdown measures are implemented in the US, they will not be as strict as the ones seen during the first wave of the virus in spring.
“Oil is trading higher at the open after Dr. Vivek Murthy, a former US surgeon general [who is also one of Joe Biden’s top advisers on the virus], told “Fox News Sunday” that any lockdown at this stage of the pandemic would look different than the sweeping closures which states enacted in the spring to suppress the virus,” said Stephen Innes, chief global market strategist at axi, in a Nov. 16 note.
“Last week, traders speculated that the US could move into very rigid lockdowns over the holiday season, impacting road fuel demand over Thanksgiving and Christmas, so we are seeing some of those shorts give way at the open,” Innes added.
Margaret Yang, strategist at DailyFX, echoed the above sentiment, and told S&P Global Platts that “Biden’s advisory suggesting that [they are] reluctant to implement harsh nationwide lockdowns is good news for energy demand in North America. This is one of the major headlines driving prices higher this morning.”
Yang added that the signing of the RCEP — the world’s biggest trade agreement involving 15 nations and covering almost a third of the world economy — and the weakening US dollar also contributed to the bullishness seen in the market this morning.
“The sentiment in Asian markets is positive this morning, and this is also because of the signing of the RCEP trade agreement on Nov. 15, which is expected to provide a long-term boost in the region’s economic activity,” Yang said. “Last but not least, the falling US dollar this morning may have provided some additional support to oil prices.”
However, despite the uptrend in prices this morning, and even without strict US lockdowns, both Innes and Yang surmised that the oil complex will likely remain pressured in the near-term by coronavirus-induced demand concerns, especially since COVID-19 cases in both Japan and the US have been rising unabated, and since most of Europe remains under some degree of lockdown.
ANZ analysts said in a Nov. 16 note: “European motorway traffic is down almost 50% in recent weeks in some countries (such as France) as lockdown measures are increased. [Even though US authorities have been reluctant to implement lockdowns,] people movement is slowing, with vehicle miles traveled on US highways falling 3% w/w in the week ending Nov. 8.”
“Fundamentals are still bleak and are unlikely to support oil prices, which I believe will consolidate at around $40-$42/b in the near term,” Yang concluded.
Biden turns focus to U.S. economy as Trump vows more challenges to election outcome
President-elect Joe Biden on Monday will focus on reviving a pandemic-battered U.S. economy as he prepares to take office, as outgoing President Donald Trump promised more lawsuits of the type that so far have failed to alter his election defeat.
With the number of coronavirus cases surging across the country, Biden will receive a briefing and give a speech in his home state of Delaware on rebuilding an economy that has suffered millions of job losses as the pandemic has killed more than 245,000 Americans.
Biden’s scientific advisers will meet this week with pharmaceutical companies developing vaccines to prevent COVID-19, a top aide to the president-elect said, in preparation for the logistical challenges of widespread vaccination after Biden, a Democrat, takes office on Jan. 20.
Trump, a Republican, briefly appeared to acknowledge defeat on Sunday only to backtrack, saying on Twitter that he concedes “nothing” and repeating his unfounded accusations of voter fraud.
He later promised on Twitter to file “big cases showing the unconstitutionality of the 2020 Election,” even though he has made no headway with his legal challenges in multiple states so far.
Election officials of both parties have said there is no evidence of major irregularities. Federal election security officials have decried “unfounded claims” and expressed “utmost confidence” in the integrity of the elections, according to a statement last week by the lead U.S. cybersecurity agency.
In another blow to Trump’s legal strategy, his campaign on Sunday dropped a major part of a lawsuit it had brought seeking to prevent Pennsylvania from certifying its results, narrowing the case to an issue affecting a small number of ballots. Biden won the state by more than 68,000 votes.
Biden beat Trump in the Nov. 3 election by the same 306-232 margin in the state-by-state Electoral College that Trump proclaimed a “landslide” when he won in 2016. The former vice president also won the national popular vote by at least 5.5 million votes, or 3.6 percentage points, with ballots still being counted.
Former President Barack Obama, a Democrat who campaigned against Trump, said it was past time for Trump to concede and criticized Republicans who also refuse to accept the victory of his former vice president.
“When your time is up, then it is your job to put the country first and think beyond your own ego”, Obama told the CBS News show “60 Minutes” in an interview that aired on Sunday.
“I’m more troubled by the fact that other Republican officials who clearly know better are going along with this”, Obama said.
More than a week after Biden was declared the victor by major news organizations based on state-by-state vote counts, the Trump administration has still not recognized him as president-elect, preventing his team from gaining access to government office space and funding normally provided to an incoming administration to ensure a smooth transition.
Biden’s top advisers warned that Trump’s refusal to begin a transition could jeopardize the battle against the virus and inhibit vaccine distribution planning.
The number of U.S. coronavirus cases passed 11 million on Sunday, up a million in a week and the fastest increase since the pandemic began.
“We are in a very dangerous period,” Dr. Michael Osterholm, a member of Biden’s COVID-19 Advisory Board and director of the University of Minnesota’s Center for Infectious Disease Research and Policy, told NBC’s “Meet the Press.”
Unless action is taken now, “we’re going to see these numbers grow substantially”, Osterholm warned. “Our future’s in our hands.”
Biden has promised to make the health crisis a top priority as president. Ron Klain, who will be White House chief of staff when Biden takes office on Jan. 20, said Biden’s scientific advisers would meet with Pfizer Inc and other drugmakers this week.
Pfizer said last week its vaccine candidate had proved more than 90% effective in initial trials, giving hope that widespread vaccination in the coming months could help get the pandemic under control. Other companies also are in advanced stages of developing promising vaccines. Reuters