Americas News
Oil Up On Improved Vaccine Performance, OPEC Maintaining Cutbacks
Pfizer on Wednesday upgrading the effectiveness of its Covid vaccine to 95 percent due to final late-stage trial results was good news for pandemic-weary crude traders, who consequently boosted the price of oil by about 1 percent.
Making up for the previous session's minimal losses, Brent on Wednesday rose 59 cents, or 1.4 percent, to settle at $44.34 per barrel, while West Texas Intermediate gained 39 cents, or 0.9 percent, to end at $41.82.
Both benchmarks were also supported by government data showing that U.S. crude inventories rose 768,000 barrels last week, compared with analyst expectations for a 1.7 million barrel rise; and by expectations that the Organization of the Petroleum Exporting Countries (OPEC) will decide to postpone its planned production increase in January when the cartel meets on November 30.
Indeed, a confidential document seen by media reveals that OPEC and its allies see oil inventories declining further in 2021 should they extend supply curbs for three months or more - perhaps to stand by as little as 73 million barrels above the five year average if extended to the end of March.
But the likelihood of Covid vaccines being disseminated soon (Pfizer indicated its serum could be deployed for emergency use within a month) remains the real potential game-changer for the embattled oil industry, and John Kemp, commodities analyst at Reuters, noted that the breakthrough caused fund managers to purchase the equivalent of 114 million barrels in the six most important petroleum futures and options contracts in the week to November 10.
He remarked, "Purchases were at the fastest rate since the middle of April, when Saudi Arabia and Russia agreed to end their volume war, causing funds to buy 122 million barrels," and he added that Pfizer "increased the probability of a business cycle upturn and a resumption of international passenger aviation next year, weighted towards the second half."
For his part, Brian Kessens, a portfolio manager at Tortoise, said investors are looking toward a "post-Covid world where there's expectation for a larger outsized rebound in crude oil demand.....near-term price signals will stay pretty strong."
