Oil dips, heads for weekly gain as vaccine rollouts support

LONDON (Reuters) – Oil dipped towards $51 a barrel on Friday though still headed for a seventh weekly gain in a row as investors focused on the rollout of COVID-19 vaccines and looked past rising case numbers and tighter lockdowns in Europe.

Pfizer has applied for approval in Japan for its vaccine, which is being used in the United Kingdom and the United States. The U.S. Food and Drug Administration is also working towards approving Moderna’s shot.

Brent crude was down 17 cents, or 0.3%, at $51.33 at 1300 GMT, near the nine-month high of $51.90 hit on Thursday. U.S. West Texas Intermediate (WTI) crude, which also reached its highest since March on Thursday, was unchanged at $48.36.

“Bullish momentum is taking a breather,” said Stephen Brennock of oil broker PVM. “Looking ahead, oil prices should continue to find support from the prospect of a COVID relief bill and accelerating vaccine rollouts.”

U.S. lawmakers are trying to agree a coronavirus relief package but a new potential roadblock emerged as some Senate Republicans insisted on language ensuring that expiring Federal Reserve lending programs cannot be revived.

While the vaccines offer hope, surging case numbers in major economies and new movement restrictions in Europe are impacting the immediate prospects for oil demand. The number of U.S. cases rose by at least 239,018 on Thursday.

Oil gained support this week from weekly U.S. supply data showing crude inventories fell by 3.1 million barrels, more than the drop analysts had expected. [EIA/S]

The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, are supporting market prices by slowing the pace of a planned increase in supplies next year.

OPEC+ plans to add 500,000 barrels per day of supply in January and will meet in early January to decide on next steps.