Singapore's fuel oil imports from the Middle East unlikely to rise in May on high freight rates, inventoriesMay 4
0611 GMT: Crude oil futures were higher in Asia afternoon trade July 23 as the market reacted positively to news of further developments in the race for a COVID-19 vaccine, after they slipped overnight following a bearish US stock build.
At 2:11 pm Singapore time (0611 GMT), ICE September Brent crude futures rose 13 cents/b (0.29%) from the July 22 settle at $44.42/b, while the NYMEX September light sweet crude contract rose 13 cents/b (0.31%) at $42.03/b.
"The US government had engaged drug maker Pfizer and co to mass produce vaccines as its COVID-19 vaccine candidate embarks on its late stage testing," said Pan Jingyi, market strategist at IG, in a note July 23.
"Although this will be contingent of the eventual success of the test results, it had nevertheless drawn the cheer from markets with hopes that a positive result here could finally alleviate some of the inconveniences brought about by COVID-19 and propel us towards normality," she added.
On July 22, the US government announced a $1.95 billion contract with Pfizer and a German biotechnology company to supply 100 million doses of a vaccine by December, according to media reports.
Oil had initially slipped overnight July 22 on news of a US stock build. US crude oil inventories increased 4.9 million barrels to a total of 536.6 million barrels for the week ended July 17, according to the weekly inventory report by the US Energy Information Administration, released July 22.
However, new market developments in the Asian trading session, including that of the hunt for a vaccine, meant that prices have since clawed back some of their strength.
"Markets are steadying and reacting to the stimulus packages and positive signs from various COVID-19 related vaccine development programs," said Stephen Innes, chief global markets strategist at AxiCorp, in a note July 23.
That former point touched on a number of stimulus packages announced by governments in a bid to stem the economic fallout of COVID-19.
"In the US, the White House has also asked for more funds from the US Congress which the American President wants to be passed by the end of this month," said Avtar Sandu, senior manager, commodities at Phillip Futures, in a note July 23.
A previous deal passed by the US Congress in March for $2,400 a month in jobless benefits is set to expire at the end of July.
This comes after the EU agreed on a Eur750 billion package of grants and loans to help member states recover from the economic impact of COVID-19.
Separately, fresh US-China tensions have led to fears of a renewed trade dispute, which could hurt oil prices. However, analysts expected this to be unlikely.
"Geopolitical concerns have been set aside with energy markets sensing that a new US/China trade war, derailing the global recovery, [is] an unlikely outcome," said Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, in a note July 23.