Oil climbs further over COVID-19 vaccine prospects, Bonny Light adds $0.62

Oil prices lifted further on Wednesday as the optimism that a vaccine, developed by Pfizer and BioNTech, will turn out 100 per cent effective in treating the coronavirus, helped sentiment and an industry document revealed United States oil stockpiles crashed analysts’ expectations.

Brent crude futures inched up $1.55 or 3.55% to $45.16 a barrel at 11:40 West Africa Time, while U.S. West Texas Intermediate (WTI) crude futures were up by $1.54 or 3.72% at $42.90 per barrel. Both benchmarks appreciated by about 3% on Tuesday.

Bonny Light, Nigeria’s premium oil grade, added $0.62 or $1.47 at the Tuesday session, closing at $42.71 while Qua Iboe, another major national oil grade, advanced $1.46 or 3.71% to $40.79.

“This week’s news about a coronavirus vaccine was encouraging and, alongside short-covering activity, strongly supported oil prices on Monday and Tuesday,” Giovanni Staunovo, oil analyst for Swiss bank UBS, said.

The bank warned of the possibility of restored Libyan crude supply and European lockdowns pressuring prices in the short term, but predicted oil would hit $60 per barrel come next year end on the premise of the prospect that producers would keep on curbing output.

 

READ ALSO: Oil prices advance after Biden’s victory, Bonny Light down by 89 cents

U.S. crude inventories dived by 5.1 million barrels last week to approximately 482 million barrels according to industry group data on Tuesday, relative to analysts’ forecasts for a decline of 913,000 barrels.

Benchmark Brent and U.S. oil prices upped by over 13% this week since trials data showed experimental remedy for COVID-19 being invented by Pfizer and BioNTech.

The overall fuel demand prognosis remains bleak, with Europe’s and United States coronavirus-induced curbs, even though oil prices were strengthened by the news of the vaccine progress.

Stephen Brennock of broker PVM said “hopes of a return to pre-COVID normalcy next year have been given a huge boost this week. Before then, however, a difficult winter is on the cards. Infection rates are still accelerating in several parts of the world including the U.S.”

Re-imposed curbs in Europe and the United States to flatten the curve of the pandemic spread have retarded the recovery of fuel demand, offsetting a rally in economies in Asia where consumption has nearly returned to pre-pandemic levels.

 

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