Second Covid Vaccine Plus China, India Data Boost Oil Prices

Meanwhile, OPEC will likely extend its output cuts: File Image/PixaBay

Like the Pfiser announcement of last week, news of Moderna's Covid vaccine being 94.5 percent effective in preventing the virus caused a solid boost in crude prices on Monday - as did strong economic data from China and India.

Brent settled up $1.04, or 2.43 percent, at $43.82 per barrel, while West Texas Intermediate crude was up $1.21, or 3 percent, at $41.34.

Gary Cunningham, director of market research at Tradition Energy, explained Monday's trading patterns by noting that, "There was a little bit of excess buying pressure, which pushed us ahead of where the fundamentals supported us, so we only partially held the gains.

"We have an overhanging concern over global demand as COVID-19 outbreaks continue around the world."

Analysts also expressed hope that the Organization of the Petroleum Exporting Countries (OPEC) would consider stalling its plan to lighten its output cuts for the sake of alleviating demand issues until the vaccine becomes widely available to the public; and after Monday's trading ended, OPEC and it allies finished a technical meeting with most countries indeed supporting a three-month extension of current oil supply cuts from January.

This was presumably good news to John Kemp, commodities analyst for Reuters, who wrote that an extension was needed because U.S. petroleum inventories "are gradually normalizing" but crude and distillate stocks are still well above the five-year average.

He added, "If the current rate of [commercial crude] inventory drawdown is sustained, stocks are likely to return to their five-year average towards the end of February."

Meanwhile, China's crude refining rose to 14.14 million barrels per day in October, matching a record set in June; the increase was attributed to more plants replenishing inventories after a holiday demand boost.

More good news on Monday came from India, whose total petroleum consumption climbed 2.7 percent last month, the first annual increase since February; also, traders said Indian Oil Corp. has issued a raft of tenders to purchase oil from West Africa, while its buying of cargoes from Nigeria has gained.