Oil prices higher on vaccine optimism, attack on Iraqi oilfield

SINGAPORE (ICIS)–Oil prices were trading higher on Thursday on hopes that demand will improve once the coronavirus vaccines are rolled out, with further support from supply disruption worries following an attack on Iraqi oilfields.

Gains were tempered by an unexpected increase in US crude stocks last week.

At 06:34 GMT, Brent crude futures were up 12 cents at $48.98/bbl, while US crude futures increased 16 cents to $45.68/bbl.

A small oilfield in Khabbaz in northern Iraq was set on fire on 9 December in a “terrorist attack”, newswire agency Reuters reported, quoting the Iraqi oil ministry.

Two oil wells were hit but overall production from the field was not affected, according to the ministry.

US crude stocks had a sharp increase of 15m barrels in the week ended 4 December, data from the Energy Information Administration (EIA) showed.

It was the biggest weekly increase in US domestic crude supplies since April that was seen as due to a possible to “one-off” rise in imports, Singapore-based UOB Global Economics and Markets Research said in a note on Thursday.

The build was also the “the second largest on record”, it added.

Global fuel demand is likely to remain weighed down by continued spikes in coronavirus cases, although good progress on the vaccine front is buoying up hopes of some recovery in 2021.

A second and third wave of infections across various countries, particularly in Europe and the US, are prompting reimpositions of lockdowns.

As of 9 December 2020, the US has the biggest number of infections at nearly 15m, followed by India with more than 9.7m cases and Brazil with above 6.6m cases, according to data from the World Health Organization (WHO).

The global tally of coronavirus cases stood at about 67.8m, with more than 1.5m deaths, the data showed.

Focus article by Pearl Bantillo

Photo: At a gas station in Luoyang city, central China. (Source: Shutterstock)

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