Oil prices drifted up on Tuesday amid hopes that the Organisation of the Petroleum Exporting Countries and allies will retain current output reduction for a minimum of three months just as reports of another Covid-19 vaccine breakthrough by biotechnology firm Moderna firmed traders’ confidence up.
Brent crude futures for January jumped 18 cents, or 0.4%, to $44.00 a barrel by 08:37 West Africa Time and United States West Texas Intermediate crude for December inched up 8 cents, or 0.2%, to $41.42.
Bonny Light, Nigeria’s premium oil grade, added $1.17, or 2.74%, to close at $43.83 at the previous session while Qua Iboe, another major national grade, gained by 84 cents, or 1.97%, to $43.52 in early trading on Tuesday.
Stock markets appreciated on likelihood of a swifter economic rebound following a statement from Moderna saying its experimental vaccine for immunisation against Covid-19 had 94.5% efficacy in keeping infection at bay considering preliminary late-state data.
Jeffrey Halley, senior market analyst at OANDA said “Moderna’s vaccine announcement had probably its largest effect on oil out of the main asset classes,” further saying the news had “almost certainly put a long-term floor under oil prices.”
Moderna’s trial outcomes come on the heels of last week declaration by Pfizer of a similar success.
“If we judge economic recovery, particularly through the lens of oil markets… with multiple high efficacy vaccines in the pipeline, there is good chance mobility will return close to pre-pandemic levels later in 2021,” Stephen Innes, chief global markets strategist at Axi said in a note.
A meeting of OPEC+ members’ oil ministers is to hold on Tuesday, which might prescribe a review of production quotas when all of them meet on 30th November and 1st December.
It could favour a suspension of a lifting in oil output for a minimum of three months beginning from January to shore up prices amid the second wave of the pandemic, sources told Reuters on Monday.
Crude production from shale formations in U.S. in September is anticipated to plump their weakest level since June, the Energy Information Administration said.
The oil throughput of China, the world’s biggest oil importer, touched its record peak in October, pointing to a swift demand rally in the country.
“Oil demand in China is exceeding pre-COVID-19 levels, which suggests oil demand is not permanently impaired.
“This is in line with mobility data and supports the view that oil demand has not been structurally damaged by changes in behaviour post COVID-19 for countries which emerged successfully from COVID-19,” Bernstein Energy analysts said.
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