Singapore—0310 GMT: Crude oil prices ticked down during midmorning trade in Asia Dec. 18 as renewed uncertainty about the US stimulus package emerged while pandemic considerations weighed on the market.
At 11:10 am Singapore time (0310 GMT), the ICE February Brent crude contract was down 17 cents/b (0.27%) from the Dec. 17 settle at $51.33/b while the NYMEX January light sweet crude contract fell 13 cents/b (0.27%) at $48.23/b. Both markers had risen 0.82% and 1.13% on Dec. 17 to settle at $51.50/b and $48.36/b, respectively.The slide in prices came after negotiations over the US stimulus package continued to drag, with signs emerging that another stopgap funding measure might be needed to avert a government shutdown until a deal is finalized.
The market has been anticipating the ratification of a stimulus bill throughout in the week started Dec. 13, and hopes were high after news emerged that congressional leaders were nearing a stimulus package worth roughly $900 billion that included a new round of stimulus checks.
"The market's attention now is squarely focused on the state of the US stimulus package, which still seems stuck even as dismal US employment data paints a picture of an economy that is clamoring for support," Vandana Hari, CEO of Vanda Insights, told S&P Global Platts on Dec. 18.
Escalating coronavirus cases in parts of the world including the US, and a spate of new lockdowns in Europe, continue to threaten oil demand.
"The spike in coronavirus cases around the world is leading to tough restrictions on travel. In the US, cases hit another daily record [on Dec. 16], while Tokyo raised its warning on the city's medical system to the highest of four levels [on Dec 17]," said ANZ analysts in a Dec. 18 note.
The market did not find solace in reports that the US Food and Drug Administration's advisory committee has endorsed the Moderna vaccine Dec. 17, even though this development has all but ensured that a second vaccine will soon be available against COVID-19.
"Positive news on the steady roll-out of vaccines has already been baked in so any fresh vaccine news, such as the one involving the Moderna vaccine, will have diminishing returns and may not move the market much," Hari said.
The FDA is expected to grant the Moderna vaccine the Emergency Use Authorization on Dec. 18, according to media reports.
"There is not much on the horizon that can move the market instrumentally at the moment, but we may see some choppy trading today based on news flow over the stimulus package," Hari added.
