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Oil Demand Revised Down Once Again

1. Oil rallies on vaccine hopes

- The oil bulls returned this week on the extraordinary news that a potential coronavirus vaccine is not only effective but could be widely available by the second quarter of 2021.

- WTI surged 9% in just a few hours and seesawed the rest of the week, but now looks steady above $40 per barrel.

- The rally was accentuated by the fact that investors have recently sold off oil, trading out of bullish positions. “The excessive investor skepticism, and their previous unbridled optimism, are often good counter-indicators,” Commerzbank wrote in a note. The bank added that there is “little in the way of fundamental factors to support any more pronounced upswing.”

- Gold reacted in the opposite way to vaccine news, plunging by around 5% shortly after the announcement. “The main explanation for this is that further stimulus measures will be less necessary if an effective vaccine becomes available,” Commerzbank said.

- The flip side is that U.S. covid cases are surging rapidly and it will take time to deploy the vaccine. Potential Washington gridlock could put even more pressure on monetary easing, a bullish factor for gold waiting in the wings.

2. Oil demand revised down on a COVID surge

- A vaccine holds out hope, but in the interim, demand has been disappointing. The IEA cut its third-quarter oil demand forecast by 0.4 mb/d this week.

- Worse, the agency…





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