Oil rises on hopes for higher fuel demand

Singapore — Oil prices rose on Tuesday after the US drug regulator granted full approval to the Pfizer/BioNTech Covid-19 vaccine, stoking investor hopes that higher fuel demand will follow a potential step up in US coronavirus vaccination rates.

Brent crude oil futures gained 66c, or 0.9%, to $69.41 a barrel by 2.01am GMT, while US West Texas Intermediate (WTI) crude futures increased by 60c, or 0.9%, to $66.24 a barrel.

Both benchmarks jumped more than 5% on Monday, helped by a weaker US dollar, after marking their biggest week of losses in more than nine months last week.

The US Food and Drug Administration (FDA), which last December authorised the Pfizer/BioNtech two-dose vaccine for emergency use, has issued full approval for use in people age 16 and older. Health officials hope the action will convince unvaccinated Americans that the shot is safe and effective, and expect it could prompt more state and local governments, as well as private employers, to impose vaccine mandates.

“Vaccine hesitancy across some minorities might end now that the FDA has given the all-clear signal,” said Edward Moya, senior analyst at Oanda. With many corporations and government agencies likely to enforce vaccine mandates, return-to-office travel should dramatically pick up, he said.

Also boosting prices, US crude and petrol inventories were likely to have declined last week, while distillate stockpiles are expected to have increased, a preliminary Reuters poll ahead of industry data showed on Monday.

Indian refiners’ crude throughput in July bounced to its highest in three months as fuel demand rebounded, which supported prices.

Price gains were capped after the US department of energy said on Monday it would sell up to 20-million barrels of crude from the emergency oil reserve to comply with legislation passed in recent years, with deliveries of the oil to take place between October 1 and December 15.

Reuters