Oil Prices Rise on Vaccine Hopes, Falling Inventories
July 15 2020 - 12:06PM
Dow Jones News
By Amrith Ramkumar
Oil prices rose Wednesday, trading around a 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 1.4% to $40.86 a barrel on the New York
Mercantile Exchange, nearing their recent peak close of $40.90 from
last week. 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 swings for oil came with stocks and other
investments climbing after new details about the first human study
of Moderna Inc.'s 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 such as Russia. The group is set to slightly
ease supply curbs next month with demand recovering, but 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.
Traders were awaiting an official statement from OPEC following
a virtual meeting of the cartel's Joint Ministerial Monitoring
Committee, expected to be released later Wednesday. Prices are
often volatile around such meetings, and many traders are still
wary that key producers such as Saudi Arabia and Russia might
increase supply too fast to maintain market share.
"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, were
recently up 1.4% at $43.51 a barrel on the Intercontinental
Exchange.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
July 15, 2020 11:51 ET (15:51 GMT)
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