Yahoo Finance Oil rally ends as concerns grow over vaccine reality
The oil price rally earlier in the week stalled on Friday amid oversupply concerns and doubts over a COVID-19 vaccine.
Crude futures (CL=F) is down nearly 1%, while Brent futures (BZ=F) is down 1.2% at $47.41 (£35.48) per barrel at around 8.30am in London.
Earlier in the week, market enthusiasm was also buoyed by the latest news on the vaccine front.
AstraZeneca (AZN) said on Monday that its coronavirus vaccine could be as much as 90% effective, be cheaper to make, easier to distribute and faster to scale-up than its rivals.
The company on Thursday said interim results from its shase II/III trial showed patients given the vaccine exhibited a “robust immune response.” Crucially, participants of all ages showed an immune system reaction.
But despite all the positive vaccine news and several trials, questions have been raised over the robustness of the trial results, which could hinder its chances of getting a speedy EU and US regulatory approval.
Scientists have raised the alarm over the way Oxford University and AstraZeneca have handled the early readout from trials of their “vaccine for the world.” There are doubts about the results showing the vaccine was 90% effective in a sub-group of trial participants who — by error initially — received a half dose followed by a full dose.
“All we have to go on is a limited data release,” said Peter Openshaw, a professor of experimental medicine at Imperial College London. “We have to wait for the full data and to see how the regulators view the results,” he said. US and European regulators “might possibly take a different view” from each other, he added.
Rising Libyan oil production is also contributing to worries about oversupply in commodities as people have been ignoring the pandemic lockdown advice and travelling.
Meanwhile, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) are expected to extend current output cuts into next year, some members of the group are facing major obstacles. For instance, Iraq is seeking upfront payments of about $2bn for a long-term crude-supply contract, as the country continues to suffer an economic crisis due to low oil prices and wider OPEC+ cuts.
“With much of oil’s rally in November built on expectation, sentiment and speculative fast money, some sort of correction was long overdue,” said Jeffrey Halley, senior market analyst at OANDA.
He added: “A thin market and the OPEC+ ministers meeting on Monday seem to have been the precursors for traders to lighten bullish positioning.”
READ MORE: FTSE 100 slips as caution creeps into market
In America, a smooth transition of power also boosted prices after the US General Services Administration chief Emily Murphy wrote a letter on Monday that confirmed president-elect Joe Biden could formally begin the hand-over process. President Donald Trump also took a softer stance on his fights against the election results, although he has yet to concede, he has paved the way to leave the White House if the electoral college votes for Biden.
WATCH: What does a Biden presidency mean for the global economy?
