Oil prices fell on Tuesday as concerns about near-term fuel demand in coronavirus-stricken Europe and the United States returned to the market after a sudden surge in progress on the Covid-19 vaccine.
WTI crude futures fell 60 cents, or 1.5%, to $ 39.69 a barrel at 01:39 GMT, and Brent crude futures fell 54 cents, or 1.3%, to $ 41.86 a barrel.
Both benchmark contracts jumped 8% on Monday, posting the biggest daily gain in more than five months after drugmakers Pfizer and BioNTech said an experimental treatment for Covid-19 was more than 90% effective, based on the results of initial trials.
"A viable vaccine clearly changes the rules of the game for oil - a market where half of the demand comes from the movement of people and things," JP Morgan said in a statement.
"But as we wrote earlier, oil is a spot asset that must first eliminate the current supply-demand imbalance before prices can rise in one or two years."
Rystad Energy said restrictions in Europe could lead to the loss of another 1 million barrels per day of oil demand by the end of this year, while the vaccine will be available in a few more months.
"The accelerated introduction of several vaccines does not reduce the risk that many US States will have to return to some form of isolation this autumn / winter," said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
Data on us oil reserves will be published on Tuesday by the American petroleum Institute, and on Wednesday by the energy information Administration.
According to the estimates of five analysts polled by Reuters, on average, us crude oil inventories fell by 1.3 million barrels in the week to November 6.
The decline in oil prices on Tuesday was contained by comments from the Saudi energy Minister, who said on Monday that the Organization of the petroleum exporting countries (OPEC) and its allies, collectively known as OPEC +, could change their supply-cutting agreement if demand falls before the vaccine is introduced. available.
OPEC + agreed to cut supplies by 7.7 million barrels per day from August to December, and then reduce the cut to 5.7 million barrels per day from January.
"If the oil market continues to grow in the period between now and the OPEC + meeting at the end of the month, it may be doomed to fail, as some members may become less inclined to postpone current cuts to next year, which will make the market vulnerable during the first quarter of next year," ING economists said in a statement.