Oil Prices Continue Rising On COVID Vaccine Hopes

On November 23, 2020, oil prices extended their gains as many traders and investors eyed a possible recovery in crude demand after successful COVID-19 vaccine trials. But, the prices were contained by the renewed lockdowns in various countries.

The sentiment was also enhanced by hopes that the Organization of the Petroleum Exporting Countries (OPEC), Russia, and the other producers will maintain crude output in check. The group is known as OPEC+.

Brent crude futures gained about 21 cents, or 0.5%, to $45.17 a barrel by 0436 GMT while the United States West Texas Intermediate crude gained up to 10 cents, or around 0.2%, to trade at $42.52 a barrel. Both of these benchmarks spiked 5% last week. The Chief Global Markets Strategist at axi, Stephen Innes, said:

“Positive sentiment continues to be driven by the recent good news about the efficacy of coronavirus vaccines in development and the expectation that the OPEC+ meeting at the end of this month could see the group extend current cuts by 3-6 months.”

The United States healthcare workers together with the others recommended that the country’s first COVID-19 inoculations may start getting shots within a day or two of the regulatory consent in December. That issue was explained by a top official of the government’s vaccine development effort said on November 22.

Chief scientific adviser for “Operation Warp Speed”, Dr. Moncef Slaoui, stated that the United States Food and Drug Administration (FDA) might approve mid-December for the mass distribution of the vaccine manufactured by German company BioNTech and Pfizer Inc, unveiling the biggest inoculation campaign in the American history.

OPEC+ Meeting
OPEC+ meets on November 30 and December 1 and it is looking at options to delay by around three months from January 2021 the tapering of their 7.7 million barrel daily cuts by almost 2 million bpd.

However, smaller Russian oil firms are still planning to pump more crude oil this year despite a global deal aiming to cut production as they have very little leeway in managing the output of start-up fields, an oil group that represents the producers said on Friday.

The US energy companies cut the number of oil and natural gas rigs working for the first time in 10 weeks even as producers return to the well pad with crude prices mostly trading more than $40 a barrel since mid-June.