Oil prices surpass $50 over vaccine hopes; Bonny Light loses $0.17

Oil prices climbed past $50 per barrel on Tuesday as hopes from the rollout of COVID-19 vaccines moderated tighter lockdowns in Europe and predictions of a slower demand recovery.

The U.S. kicked off coronavirus vaccination on Monday as the country’s fatalities passed 300,000. The United Kingdom and Canada have also started to administer shots, raising hopes of oil price recovery.

Brent crude, the benchmark for Nigerian oil grades, advanced by 14 cents to $50.43 per barrel at 11:51 West Africa Time while United States West Texas Intermediate crude lifted by 14 cents to $47.13.

Bonny Light, Nigeria’s flagship crude grade, dipped by 17 cents to $49.45 on Monday while Qua Iboe, another major national grade, was down by 47 cents at $50.05 at early trade on Tuesday.

Oil prices have rallied in the last couple of weeks, with Brent touching $51.06 on December 10, its peak since March, boosted by the optimism of demand recovery. Oil prices had fallen to their record lows in March following the coronavirus outbreak.

“Brent is continuing to defy all the negative news. More and more countries in Europe and states in the U.S. are tightening the corona restrictions over Christmas and the new year, which is likely to weigh on demand,” said Carsten Fritsch, analyst at Commerzbank.

Read also: Oil prices increase on hopes of coronavirus vaccines, Bonny Light sheds $1.08

London doubled down on pandemic curbs requiring bars and restaurants to shut down, Italy is contemplating stricter measures over yuletide and it is probable that Germany will be under lockdown until early next year, casting shadow on dramatic oil price recovery.

Forecasters are also reducing demand numbers. The International Energy Agency on Tuesday said any vaccine impact on demand is still many months away.

On Monday, the Organisation of the Petroleum Exporting Countries said oil demand would rise slower than expected.

Tamas Varga of oil broker PVM said “there is a growing agreement between forecasting agencies that the improvement in global oil demand might not start at the beginning of next year but in the second half.”

The latest data on U.S. crude supplies are anticipated to show a mixed picture, with gasoline and distillate inventories rising and oil stockpiles falling.

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