Crude oil futures buoyed by vaccine momentum ahead of possible FDA approval

Singapore — 0258 GMT: Crude oil futures continued their upward trajectory during mid-morning Asian trade Dec. 11 as vaccine momentum intensified following an endorsement of the Pfizer-BioNTech vaccine by the US Food and Drug Administration advisory committee, and crude demand from India and China also supporting sentiment.

At 10:58 am Singapore time (0258 GMT), the ICE Brent February contract was up 15 cents/b (0.3%) from the Dec. 10 settle to $50.41/b, while the January NYMEX light sweet crude contract was up 22 cents/b (0.47%) at $47/b. Both markers had closed at nine-month highs on Dec. 10, with the ICE Brent February contract rising 2.84% to settle at $50.25/b and the January NYMEX light sweet crude contract rising 2.77% to settle at $46.78.

The risk-on sentiment in the market intensified after a committee of experts on the Vaccines and Related Biological Products advisory committee voted that the FDA grant the Pfizer-BioNTech Vaccine an Emergency Use Authorization.

With the committee's endorsement, the vaccine is one step closer to receiving the EUA. The final decision from the FDA could come in "the next couple" of days, according to Marion Gruber, the director of the FDA's vaccine research office.

The vaccine has already been approved in Canada, Bahrain, Saudi Arabia and the UK, the last of which began distributing the vaccine on Dec. 8.

"Oil prices broke key chart resistance and climbed to a nine-month high despite a large build in US inventories [reported on Dec. 9]. The rally was propelled by FDA's warm gesture towards a wider distribution of Pfizer's COVID-19 vaccine in a meeting on Thursday [Dec. 10], which raised prospects for a faster economic recovery and removal of lockdown measures," Margaret Yang, strategist at DailyFX told S&P Global Platts Dec. 11.

"Besides, continuous strengthening of iron ore and copper prices reflected strong demand from Asia, which also brightened the energy demand outlook," she added.

To this, Stephen Innes, chief global strategist at Axi in a Dec. 11 note said: "Asia continues to provide much of the backstop for physical with unquenchable oil purchases by China teapots and multiple Indian producer tenders in the pipeline and the softer US dollar is helping the overall commodity cause."

Meanwhile, uncertainty over the US stimulus package -- seen by many to be key to boosting US economic recovery and oil demand -- continued to persist in the market, as lawmakers failed to reach an agreement on contentious issues including the Senate Republican's demand of a "liability shield" for businesses and entities such as schools and universities.