But 'Peak Oil' may have already been reached, says demand analyst: File Image/Pixabay
The steady roll out of Covid vaccinations across the world coupled with a weaker U.S. dollar led to more price increases for crude on Friday - and a seventh straight weeks of gains for the commodity.
Following the announcement that Pfizer has applied for approval in Japan for its vaccine, which is being used in the United Kingdom and the U.S., Brent settled up 76 cents, or 1.5 percent, to $52.26 per barrel; West Texas Intermediate settled up 74 cents, or 1.5 percent, to $49.10.
Support also came from news that Moderna's Covid vaccine could be approved in the U.S. by end of Friday, as well the U.S. dollar staying near 2-1/2 year lows, which makes oil cheaper for purchase using other currencies.
Edward Moya, senior market analyst, Oanda
It's all about the return to pre-pandemic life, and we're getting there
Also highly anticipated on Friday but still delayed as of press time was the approval of a $900 billion relief package for the U.S. economy ravaged by government-imposed pandemic lockdowns: it was assumed lawmakers would if nothing else pass a third stopgap spending bill before midnight and approve the package at the beginning of next week.
While investors are buoyed by the likelihood of the Covid pandemic ending in 2021, several news items on Friday were concerned about the ultimate fate of crude, to wit: The Rockefeller Foundation disclosed in an email that it will more than halve its portfolio's total exposure to fossil fuels to less than 1 percent in the near future, after already having cut its exposure to fossil fuel companies by half in the past six years.
The announcement was regarded as a victory for the divestment movement, which has pressured institutional investors to shed fossil fuel investments.
Also, David Doherty, oil demand analyst at Bloomberg, told the news agency that a peak for the amount of oil produced in a single year may have already been reached, with electric vehicles, plastic alternatives, and electrification of industrial processes set to cut into demand.
Still, industry insiders are unabashedly optimistic about the recovery of the commodity in the near future, and Edward Moya, senior market analyst at Oanda, said, "It's all about the return to pre-pandemic life, and we're getting there.
"You have major breakthroughs on the vaccine front, which has been very positive for the demand recovery outlook; people are also playing close attention to the overall trajectory of the U.S. dollar."
As for the current lockdowns, Goldman Sachs said in a note the hit is much smaller than earlier in the year and likely only a speed bump to rebalancing the market - so expect choppy trading over the next few weeks as news media publishes the expected headlines on tightening restrictions.