Crude Oil Prices climb 3-Month High On Vaccine race

Cornelia Mascio
Novembre 24, 2020

Crude oil prices moved higher on Monday, extending gains from previous week, as rising optimism about potential Covid-19 vaccine raised hopes that energy demand will pick up soon.

OPEC+, a grouping that includes the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, will discuss its output policy at a meeting on November 30 and December 1.

West Texas Intermediate Crude oil futures for January ended up $0.64 or about 1.5% at $43.06 a barrel. Both oil benchmarks settled up about 2% on Monday after gaining about 5% last week.

British drugmaker AstraZeneca said on Monday its vaccine for the novel coronavirus, developed along with the University of Oxford, could be around 90% effective under one dosing regimen.

Demand outlook has improved with news on progression towards Covid-19 vaccines development.

Uncertainties surrounding US post-election disputes also started clearing after President Donald Trump on Monday allowed officials to proceed with a transition to President-elect Joe Biden, giving his rival access to briefings and funding even as he vowed to persist with efforts to fight the election results.

PVM analyst Stephen Brennock stated the news was "detaching sentiment" from "gloomy fundamentals".

"Investors are ignoring near-term headwinds, chief among which are surging global COVID infections, and instead looking ahead to next summer", he said.

Winding down production cuts at a time when demand is falling and production from Libya is rising, raises the chances of a supply glut, which has prompted OPEC+ to consider pushing back any increase in supply by three or six months.

But smaller Russian oil companies are still planning to pump more crude this year despite a global deal to cut production as they have little leeway in managing the output of start-up fields, a group representing the producers said on Friday.

However, there was "no immediate Saudi confirmation of the claim", said Reuters. Aramco's oil production and export facilities are mostly in Saudi's Eastern Province, more than 1,000 km across the country from Jeddah.

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