In outside markets, U.S. equities finished modestly lower on Monday with Dow Jones Industrials retreating 89 points and S&P 500 down 0.7%.
Oil and equities cut earlier losses as investors raised bets $1 trillion U.S. stimulus package to be unveiled later this week by President-elect Joe Biden would offset some of the pandemic-induced scars for the labor market and lend support for fuel demand. There is little appetite for fiscal restraint among Democrats and it will be tough for many Republicans to vote against $2,000 stimulus check as well as broad funding for a coronavirus vaccination campaign. There are also signs the deal would include a $15 per hour minimum wage .
So far, 21 million vaccines have been administered in the United States, with nearly six million having now been administered the first dose, including 600,000 in long-term care facilities. That accounts for about 2.5% of U.S. total population. In comparison, Israel — a country of 8.8 million, has vaccinated about 20% of its population.
Further stoking demand fears, the White House coronavirus task force warned Sunday the recent spike in new COVID-19 cases could be driven by a possible new “USA variant.” It remains unclear whether vaccines developed by either Moderna or Pfizer and BioNtech are as effective against new coronavirus variants.
Elsewhere, China reported a new surge of coronavirus cases in the central province of Hebei, triggering new restrictions on movement in Beijing and an all-out lockdown in the provincial capital of Shjuazhuang — a city with 11 million residents. The recent developments may suggest fresh outbreaks in metropolitan areas could undermine the country’s fuel demand outlook in the short term.
On the back of these emerging risks, Goldman Sachs has revised down its expectations for global oil demand during the first quarter by 1 million to 2 million barrels per day (bpd). However, the investment bank still expects the global oil market to fall into deficit in the second quarter through year end, with demand projected to outstrip production by 2.3 million bpd in September, or nearly 3% of global oil supplies for that month.
Liubov Georges can be reached at liubov.georges@dtn.com
