Oil pulls back amid Covid restrictions, but still posts sixth straight week of gains

Dust blows around a crude oil pump jack and flare burning excess gas at a drill pad in the Permian Basin in Loving County, Texas, November 25, 2019.
Angus Mordant | Reuters

Oil prices turned lower on Friday, as demand worries due to new coronavirus-related restrictions on business in New York overshadowed progress toward vaccination programs.

Brent futures fell 28 cents, or 0.56%, to settle at $49.97 a barrel, after rising above $51 a barrel on Thursday to an early-March high.

U.S. West Texas Intermediate (WTI) crude fell 21 cents, or 0.4%, to settle at $46.57, having risen almost 3% in the previous session.

"Restrictions in New York are weighing on prices," said Bob Yawger, director of energy futures for Mizuho in New York. On Thursday, funds had placed net long bets as Brent topped $50 a barrel. "As we approach the close, the speculator community is reluctant to go home with a net long position," he said.

Governor Andrew Cuomo ordered New York City restaurants to suspend indoor dining effective Monday, amid an uptick in cases.

For the week, Brent was up almost 2% and WTI was up less than 1%. That puts both benchmarks on track for a sixth consecutive week of gains for the first time since June.

Promising vaccine trials have helped lift some gloom over record increases in the number of coronavirus infections and deaths around the world, and Cuomo sounded a note of optimism, saying he expected 170,000 doses of Pfizer's vaccine to be in New York by Sunday or Monday.

Britain began inoculations this week and the United States could start vaccinations as early as the coming weekend, while Canada on Wednesday approved its first vaccine with initial shots due from next week.

Outside advisers for the U.S. Food and Drug Administration have voted to endorse emergency use of Pfizer's vaccine, paving the way for the agency to authorise its use in a nation where COVID-19 has killed more than 285,000.

"The vaccine optimism ... seems to continue unscathed due to the back-to-back approvals vaccines are getting and the quicker-than-previously-thought rollout of the first campaigns in key markets," Rystad Energy analyst Paola Rodriguez-Masiu said.

A big jump in U.S. crude stockpiles last week served as a reminder that there is still plenty of supply available, but it was all but ignored as bulls ran through the market this week.

"The long-awaited rollout of vaccination programmes provided ample bullish fodder in the face of rising US oil inventories," brokerage PVM's Stephen Brennock said.

A fall in world shares as markets confronted the risk of Britain leaving the European Union without a trade deal weighed on sentiment.

On Friday, British Prime Minister Boris Johnson and European Commission chief Ursula von der Leyen said a deal was unlikely.