Oil prices rose on Tuesday after the U.S. drug regulator granted full approval to the Pfizer Inc/BioNTech SE COVID-19 vaccine, stoking investor hopes that higher fuel demand would follow a potential step up in U.S. coronavirus vaccination rates.
U.S. West Texas Intermediate (WTI) crude futures increased by $1.44, or 2.20%, to $66.92 a barrel.
Brent crude oil futures gained $1.40, or 2.04%, to $70.18 a barrel.Both benchmarks jumped more than 5% on Monday, helped by a weaker U.S. dollar, after marking their biggest week of losses in more than nine months last week.
The U.S. Food and Drug Administration (FDA), which last December authorised the Pfizer/BioNtech two-dose vaccine for emergency use, has now issued full approval for use in people age 16 and older.
Health officials hope the action will convince unvaccinated Americans that the shot is safe and effective, and expect it could also prompt more state and local governments, as well as private employers, to impose vaccine mandates.
“Vaccine hesitancy across some minorities might end now that the FDA has given the all-clear signal,” said Edward Moya, senior analyst at OANDA.
“With many corporations and government agencies likely to enforce vaccine mandates, return to office travel should dramatically pick up in the fall.”
Also boosting prices, U.S. crude and gasoline inventories likely declined last week, while distillate stockpiles are expected to have increased, a preliminary Reuters poll ahead of industry data showed on Monday.
Indian refiners’ crude throughput in July bounced to its highest in three months as fuel demand rebounded, which supported prices.
The rapid spread of the highly infectious Delta variant of the novel coronavirus and low vaccination rates in Asia, overall, however, capped price gains as fuel demand is suppressed.
The U.S. Department of Energy said Monday it would sell up to 20 million barrels of crude from the emergency oil reserve to comply with legislation passed in recent years, with deliveries of the oil to take place between Oct. 1 and Dec. 15.