Oil edged lower as near-term demand risks due to a resurgent pandemic tempered optimism over the prospect of imminent vaccine rollouts.
Futures traded near $46 a barrel in New York after falling 1.1% Monday in their first decline in four days. The U.S. is now seeing hospitalizations due to Covid-19 increase by almost 2,000 a day and is averaging about as many deaths as during the first surge of the virus in April.
Iran said it’s preparing to boost oil exports in a sign it expects the White House to ease some sanctions under a Joe Biden presidency, adding another potential supply risk to the market. The U.S., meanwhile, announced fresh sanctions against Chinese officials, worsening the relationship between the world’s two largest economies in another potential threat to energy demand.
Oil is still close to a nine-month high after surging last month amid optimism over vaccine breakthroughs. It’s price path over the next few months looks to be heavily dependent on how quickly Covid-19 vaccines can be deployed. While toughening restrictions to curb the spread of the virus remain a near-term headwind in Europe and the U.S.., the recovery in Asia appears to be accelerating.
Chinese exports jumped by the most since early 2018 last month. The strength in Asian demand led Saudi Arabia to raise oil pricing to the region and has also contributed to a rise in physical prices of North Sea crude.
Higher consumption is also draining oil stockpiled on ships at sea, with floating storage globally falling below 100 million barrels for the first time since April last week, according to data from Vortexa Ltd.
