Oil futures lost ground Friday as COVID-19 cases continued to rise at a rapid clip, though crude remains on track for sharp weekly gains inspired by progress toward a vaccine.
West Texas Intermediate crude for December delivery fell 76 cents, or 1.8%, to $40.34 a barrel on the New York Mercantile Exchange. January Brent crude, the global benchmark, was down 59 cents, or 1.4%, at $42.94 a barrel on ICE Futures Europe.
The U.S. saw a record 163,405 new cases of COVID-19 on Thursday, and at least 1,171 people died, according to a New York Times tracker. In the last week, the U.S. has averaged 134,078 cases a day, up 72% from the average two weeks ago, with cases rising in 49 states and territories.
Oil jumped sharply earlier this week, after Pfizer Inc. and BioNTech SE reported their COVID-19 vaccine candidate was more than 90% effective in preventing infections during a trial. But analysts noted that even if the drug does receive approval, it would likely be months before a vaccine is widely available. Meanwhile, surging COVID-19 cases is seen curtailing activity, undercutting near-term demand for crude.
But analysts said the vaccine progress would likely serve to put a floor under oil prices.
“While there are no delusions of grandeur regarding the implications of a vaccine on oil demand over the immediate term, the positive announcement is likely to make investors think twice before pressing shorts further,” said Michael Tran, analyst at RBC Capital Markets, in a note.
“This marks a material week on week sentiment shift given that shorts climbed to near the highest level since the spring,” he said. “At a minimum, we believe that the calculated de-risking of the previously undefined COVID outcomes will lead to a firm floor for the oil market, at least until the pace of the demand side green shoots can be quantified.”