Despite the measure of hope for the long-term, US cities from the West to East coasts have imposed stricter measures to slow surging case counts, raising concerns that the virus will further crimp demand for fuel.
"In the US, the virus spread is exponential and right now many states are probably going to be forced to deliver stricter measures and return to lockdowns", said Edward Moya, a senior market analyst at Oanda Corp. However, a topic that will likely be addressed is the surge in Libyan oil production which is now estimated at 1.2mbpd, up 100kbpd a couple of months ago.
Prices of the barrel of the West Texas Intermediate retreat for the second consecutive session on Thursday after failing to advance further north of the $43.00 level on a more sustainable fashion on Wednesday.
Its head of oil markets Bjornar Tonhaugen said: "The fast-tracking of multiple vaccines doesn't mitigate the risk that many USA states will have to return to some form of lockdown this autumn/winter".
The Organization of Petroleum Exporting Countries (OPEC) has revised down its expectations for global oil demand for yet another month, as the renewed spike in coronavirus cases in major economies is slowing down the oil demand recovery.
Oil futures tracked with USA equities, which also fell on pandemic concerns. The virus has infected 51.7 million people globally and nearly 1.3 million.
IEA said global oil demand forecast to shrink by almost 9 mbpd.
For next year, the group now sees demand growing by 6.2 million bpd on an annual basis, representing a downward revision of another 300,000 bpd from October report.
Reuters reported last week that OPEC+ is considering deeper oil output cuts early next year, citing one OPEC source and one source familiar with Russian thinking.
In fact, traders continue to gauge the persistent increase in COVID-19 cases across the globe vs. tighter restriction measures in many countries, all putting extra pressure on the demand for oil and undermining at the same time the economic recovery.
Investors who championed a drop in crude oil recently were rewarded for using inverse ETFs like the ProShares UltraShort Bloomberg Crude Oil (SCO).
"When stocks gave up gains, oil followed", said Phil Flynn, senior analyst at Price Futures Group in Chicago.