Oil Prices Rise on Vaccine Hopes, Falling Inventories
July 15 2020 - 03:34PM
Dow Jones News
By Amrith Ramkumar
Oil prices rose Wednesday, hitting a fresh 4 1/2 -month high
with investors hoping for faster-than-expected coronavirus vaccine
development and weighing a sizable drop in domestic crude
stockpiles.
U.S. crude futures added 2.3% to $41.20 a barrel on the New York
Mercantile Exchange, their highest close since early March. Prices
are well below where they started the year, with the coronavirus
denting demand, but have rebounded in recent weeks with some states
and countries reopening and producers curtailing supply. U.S. crude
briefly fell below $0 for the first time ever in late April due to
a global oil glut.
Wednesday's gains for oil came with stocks and other investments
climbing after new details about the first human study of Moderna
Inc.'s experimental vaccine showed that it induced the desired
immune response for all 45 people evaluated. Researchers said the
results bolstered their decision to start a large clinical trial
slated to start later this month.
The Moderna shot is just one of the clinical trials planned in
the coming weeks, and traders will be closely monitoring the
results to gauge how quickly a vaccine could ease the damage caused
by the pandemic and support consumer confidence.
Analysts were also weighing the latest weekly U.S. crude
inventory figures, which showed that stockpiles fell much more than
expected last week. Inventories dropped 7.5 million barrels,
compared with a 1.3-million-barrel decline projected by analysts
and traders surveyed by The Wall Street Journal.
Despite rising coronavirus cases in much of the U.S., gasoline
demand declined only modestly, the data showed, driving hopes that
a weekslong rebound in fuel consumption could resume in the coming
months. Meanwhile, U.S. crude output stayed flat at 11 million
barrels a day for the third consecutive week, easing concerns about
a quick increase in domestic production in response to the
crude-price recovery.
Additionally, investors were parsing the latest reports about
output cuts from the Organization of the Petroleum Exporting
Countries and allies like Russia. Key OPEC members and their
partners said Wednesday they have agreed to loosen current supply
curbs by 1.6 million barrels a day with demand rising. The
announcement was less severe than some analysts expected, and
reports that extra cuts from countries that haven't been complying
with the quotas are imminent have eased fears that higher OPEC
supply could flood the market with oil again.
At the same time, many traders are still wary that key producers
such as Saudi Arabia and Russia might increase supply too fast to
maintain market share, keeping oil in its recent trading range.
"The price recovery is fragile and hinges not only upon avoiding
a derailing of the demand recovery, but also OPEC+ adherence to
quotas as they slowly ramp-up output in August," Paola
Rodriguez-Masiu, senior oil-markets analyst at Rystad Energy,
said.
Brent crude futures, the global gauge of oil prices, added 2.1%
to $43.79 a barrel on the Intercontinental Exchange.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
July 15, 2020 15:19 ET (19:19 GMT)
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