Photo: Illustration; Source: Equinor

Oil price hits highest levels since March over vaccine hopes

Brent crude oil prices reached highest levels since March as news of another promising coronavirus vaccine raised hopes of a quicker recovery in oil demand, while U.S. President-elect Joe Biden received the go-ahead to begin his leadership transition.

According to a Reuters article, Brent crude futures rose 43 cents, or 0.9 per cent, to $46.49 a barrel, while U.S. West Texas Intermediate crude added 45 cents, or 1.1 per cent, to $43.51 a barrel.

Brent rose to a high of $46.56 on Tuesday, the highest level traded since early March before Saudi Arabia initiated a price war with Russia, which crashed the oil market. Both oil benchmarks settled up about 2 per cent on Monday after gaining about 5 per cent last week.

Stephen Innes, chief global markets strategist at financial services firm Axi, said: “Progress on developing and distributing a vaccine de-risks the path back to normal for oil markets.

If mobility data is a measure of oil price sentiment, in the not too distant future, the vaccine will get people back on aeroplanes and cruise ships“.

AstraZeneca said on Monday that its Covid-19 vaccine was 70 per cent effective in pivotal trials and could be up to 90 per cent effective, giving the world’s fight against the global pandemic. This is the third vaccine with a potential to be cheaper to make, easier to distribute, and faster to scale-up than rivals. This follows positive trial results from the team of Pfizer and BioNTech while the second was developed by Moderna.

More wind in the sails of oil prices was added by U.S. President Donald Trump allowing officials on Monday to proceed with a transition to Joe Biden’s incoming administration, giving his rival access to briefings and funding even as he vowed to persist with efforts to fight the election results.

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Reuters added in its article that U.S. crude oil inventories likely edged lower last week, while distillate stockpiles were seen decreasing for a tenth straight week.

Traders also focused on a week of technical meetings by OPEC and its allies to prepare the ground for next week’s ministerial gathering, which is set to discuss extending oil output curbs into next year due to weak demand amid a second wave of Covid-19.