Vaccines are good for humanity and the global economy, however, it is not the same for the dollar. The deterioration of the epidemiological situation in Europe and the United States and doubts that the majority of Americans will be able to get vaccinated before the second quarter of 2021, somewhat cooled the ardor of the bears on the USD index and led to a pullback of Brent and WTI. Oil is quoted in dollars, so the strengthening of the greenback is bad news for it. In addition, the extension of restrictions imposed by France, which were about to be lifted, and the transition of California, the largest state consumer of petroleum products, to a hard lockdown sowed doubts among investors about the rapid recovery of global demand for black gold.

Dynamics of oil and the US dollar:

The market was very optimistic about the increase in OPEC+ production since January by 500,000 b/d. In accordance with the terms of the previously reached agreement, the cartel, Russia, and other producing countries were to increase production by 2 million b/d. If they did, Brent and WTI would risk falling. Many believed that in order to prevent this from happening, it is necessary to extend the agreement on reducing production by 7.7 million b/d for several months in 2021. The decision was made, which satisfied both Moscow and Riyadh. Investors immediately realized that such a verdict indicates that OPEC+ has no doubts about the recovery of global demand next year, which allowed black gold to soar to the highest levels in 9 months.

While the cartel and Russia are in no hurry to throw an additional 2 million b/d on the market, Iran is ready to do it for them. Tehran is seriously counting on a reset of relations with the United States after Joe Biden came to power and recalls that after signing a nuclear agreement with the West in 2015, it easily increased production to 2 million b/d. I don't think the new head of the White house needs this. The US oil industry is already suffocating from low prices and looked with hope at OPEC+ in early December, if Iran increases production, Brent and WTI quotes risk going down.

However, I do not think that fans of black gold urgently need to throw a white flag. High demand for oil in China and other countries that have successfully coped with the pandemic in Asia creates a powerful airbag for both major varieties. The increased interest in black gold in this region is evidenced by the fact that Saudi Arabia has increased oil prices for it and plans to increase supplies.

Another important bullish factor for Brent and WTI is that neither oil nor US stock indexes sank, as in March, or even lower, despite the fact that the second wave of COVID-19 looks more dangerous than the first.

Technically, a pullback of Brent after reaching the target of 127.2% on the AB=CD pattern on the daily chart looks logical. Most likely, after a small correction, the North Sea variety will restore the upward trend and go in the direction of $52.5 and $56.6 per barrel. The recommendation is to buy on pullbacks.

Brent daily chart: