Crude oil jumped nearly 10% on Monday for its biggest daily gain in nearly six months after the announcement of a highly effective Pfizer vaccine against COVID-19 and Saudi Arabia’s assurance that a OPEC + oil production agreement could be adjusted to balance the market.
Brent rose $ 3.41, or 8.6%, to $ 42.86 a barrel at 1:02 p.m. GMT (6:32 p.m. in India), while U.S. West Texas Intermediate crude rose 3.57 $, or 9.6%, to $ 40.71.
“Asset prices are moving faster than the real economy, and oil and other risky assets are now responding positively to the news about the Pfizer vaccine,” said Harry Tchilinguirian, analyst at BNP Paribas.
Pfizer has said its investigational vaccine is over 90% effective in preventing COVID-19, based on initial data from a large study.
Saudi Energy Minister Prince Abdulaziz bin Salman said the OPEC + deal on oil production cuts could be adjusted if there is consensus among group members.
The Saudi minister commented after being asked whether OPEC + – which includes OPEC states, Russia and other producers – will stick to existing cuts of 7.7 million barrels per day (bpd ) rather than bringing them down to 5.7 million bpd from January.
Key members of the Organization of the Petroleum Exporting Countries (OPEC) are wary of US President-elect Joe Biden’s easing measures on Iran and Venezuela, which could mean increased oil production that would make more difficult to balance supply and demand.
“Although a Biden presidency increases the likelihood that Iranian oil supplies will return to the market, it is not something that will happen overnight, and we still think it is more likely an event of end of 2021-2022 “, said ING in a note.
Oil prices have also found support from a weaker US dollar thanks to Mr Biden’s election victory in the United States, said Giovanni Staunovo, oil analyst at UBS.
The dollar weakened on Monday, hitting a 10-week low and boosting dollar-priced commodities that become more affordable for buyers outside the United States.
China, the world’s largest importer of crude, said October imports were down 12 percent from September.
However, renewed European lockdown measures to contain rising COVID-19 cases still appear poised to push the outlook for global oil demand down, an International Energy Agency official said ( OUCH).
“Large parts of the European continent are blocked. It would surely go to the negative side, ”said Keisuke Sadamori, IEA director for energy markets and security.