London — 1010 GMT: Crude oil futures were lower in morning European trade on March 17, as European vaccine delays exacerbate demand recovery uncertainty, while the International Energy Agency raised its near-term global oil demand outlook.
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Register NowAt 1010 GMT, May ICE Brent crude futures were down 59 cents/b at $67.80/b, while the April NYMEX WTI futures contract was 39 cents/b lower at $64.41/b.
The oil markets will gauge vaccine rollouts as a key indicator of oil demand recovery in the coming months, while European delays in administering the AstraZeneca vaccination cast a shadow over prospective near-term demand recovery.
"Small wonder, then, that oil prices sagged for a third consecutive day on Tuesday after fresh delays hit Europe's tardy vaccination programme," PVM analysts said in a morning note. "Several EU countries opted to halt the rollout of the AstraZeneca COVID-19 jab over safety fears."
"The suspension will not do the bloc's economic and fuel recovery any favours," the PVM analysts said. "Europe's medicines watchdog was quick to play down concerns that the jab is the cause of reported blood clots. The hope now is that Europe can get its sluggish vaccine rollout back on track."
However, the IEA raised its near-term global oil demand outlook March 17, citing expectations that the rollout of COVID-19 vaccines would trigger a sharp rebound in economic growth despite hopes of curbing oil use by switching to cleaner sources of energy.
Overall, the IEA said it now sees global oil demand rising by 3.5 million b/d between 2019 and 2025, up from a growth estimate of 2.8 million b/d in October.
The IEA also dismissed talks of an oil price super cycle and a looming supply crunch, noting there was "more than enough oil in tanks and under the ground to keep global oil markets adequately supplied."
Some oil market analysts have said they expect oil to be swept up in a commodity super cycle like copper, but many remain unconvinced, attributing the current increase in oil prices to a managed supply situation.
Oil prices have risen by almost 30% this year, with ICE Brent rising above $70/b this month, the first time since early January last year.
Despite the bullish runs on prices, the IEA said stock levels remain ample and there is plenty of spare production capacity.
The OPEC+ producers' alliance is withholding roughly 8 million b/d from the market due to its current output cuts.
But the prospect of stronger demand and continued OPEC+ production restraints point to a sharp decline in inventories during the second half of the year, the IEA said.
Refining throughputs are also set to resume growth from the second quarter as oil demand in the West starts to pick up steadily.
Refineries, however, will have to find a way to navigate both the move to decarbonization and the demand uncertainties brought on by the pandemic, the IEA said.
In its latest medium-term oil report, Oil 2021, the IEA said that "successfully managing the energy transition" will be the key challenge for refiners in the coming years.
The report also said that the outlook for the refining sector was grim despite a modest rise in oil demand as chronic overcapacity is likely to persist.
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March 17, 2021 at 06:01PM
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OIL FUTURES: Crude lower, vaccine delays cast shadow over demand recovery - S&P Global
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