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James Hyerczyk
WTI and Brent Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Monday despite low U.S. holiday volume. The U.S. financial markets are essentially closed due to the Presidents’ Day holiday, but trading is being limited to an e-trading session. Trading will halt at 17:00 GMT then re-open at 22:00 GMT.

At 12:33 GMT, April WTI crude oil futures are trading $60.47, up $1.09 or +1.84% and April Brent crude oil futures are at $63.33, up $0.90 or +1.44%.

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Buyers are driving up prices in reaction to optimism over vaccine rollouts in the hopes of increased demand. Meanwhile, producers continue to keep supply reined in.

Vaccine Rollouts Take Center Stage

Crude is being underpinned as more people are vaccinated across key markets such as the United States, and with U.S. President Joe Biden looking to pump an extra $1.9 trillion in stimulus into the economy, the so-called reflation trade has gathered steam in recent days.

In other news, Israel’s largest healthcare provider on Sunday reported a 94% drop in symptomatic COVID-19 infections among 600,000 people who received two doses of the Pfizer’s vaccine in the country’s biggest study to day.

In the UK, British Prime Minister Boris Johnson said on Monday he would plot a cautious but irreversible path out of the COVID-19 lockdown this week after the vaccination of 15 million vulnerable people.

With nearly a quarter of the United Kingdom’s population now inoculated with a first dose of a COVID vaccine in a little over two months, Johnson is under pressure from some lawmakers and businesses to reopen the shuttered economy.

Meanwhile, Australia and New Zealand are preparing planned coronavirus vaccine rollouts. Australia will begin inoculating against COVID-19 next week after receiving the first 142,000 doses of the Pfizer-BioNTech vaccine, while in New Zealand, vaccinations are planned to start February 20.

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Buyers Banking on Tighter Supplies to Offset Demand Warnings from OPEC, IEA

Prices have rallied over recent weeks as supplies tighten, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the group OPEC+.

Over the weekend, Russian Deputy Prime Minister Alexander Novak said the global oil market is on a recovery path and the oil price this year could average $45-$60 per barrel.

Late last week, oil prices eased after both OPEC and International Energy Agency (IEA) said renewed lockdowns and the emergence of new coronavirus variants reduced the prospect of a swift demand recovery.

Short-Term Outlook

Crunching the news it looks like the next major story will be whether the vaccines will be effective against the expected surge in coronavirus variant cases. U.S. officials have issued a warning about the variants, but traders seem to be ignoring the news.

For a look at all of today’s economic events, check out our economic calendar.

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