Meanwhile, Saudis and Russia compete for China market: File Image/Pixabay
The concern over rising Covid rates that has informed crude trading of late is still prevalent, but optimism over the recently announced vaccine seems to be gaining traction within trading circles and was said to the reason oil prices rose on Friday, contributing to a third straight week of gains.
Brent rose 46 cents to $44.66 per barrel, while West Texas Intermediate gained 28 cents to $42.18 per barrel; both benchmarks were up more than 4 percent so far this week.
The latest cause for optimism was Pfizer on Friday applying to U.S. health regulators for emergency use of its vaccine, which has proven to be 95 percent effective in protecting against Covid.
Bjornar Tonhaugen, Rystad Energy
Positive news is breaking daily about the vaccine deliveries
Bjornar Tonhaugen, head of oil markets at Rystad Energy, remarked, "Despite the fact that in reality it will take time for a global vaccine campaign to be implemented, time during which oil demand will suffer, positive news is breaking daily about the vaccine deliveries."
Oil also got a boost on Friday after it was agreed in Washington to resume discussions on providing more Covid relief.
As for oversupply concerns, while Libya has raised production to pre-blockade levels and smaller oil companies in Russia will reportedly pump more crude this year, U.S. energy firms cut the number of oil and natural gas rigs operating for the first time in 10 weeks to 310, according to Baker Hughes.
Further counterbalance will presumably be provided by the Organization of the Petroleum Exporting Countries (OPEC): "An assumed roll-over of current cuts by OPEC+ to Q1 2021 is probably in today's price of $44 per barrel," Nordic bank SEB said.
And despite the demand ravages caused by the Covid-inspired government lockdowns, Saudi Arabia and Russia are now in a tight race to become China's top oil supplier in 2020, with both countries boosting crude exports to between 1.6 and 1.7 million barrels per day (bpd).
While all of China's top three suppliers have increased daily exports this year, Iraq saw the biggest rise in oil exports to China so far in 2020, with a rise by nearly 190,000 bpd in the first 11 months of this year versus full-year volumes in 2019.
Abigail Doolittle, markets reporter at Bloomberg, noted that while 2020 has been a wild year for oil, the market is showing signs of real strength and that in 2021 "crude prices may rise to the mid-$50s."
Better still, Bobby Tudor, chairman of Tudor Pickering Holt & Co., told Bloomberg that "at the end of the day, global oil demand is highly likely to follow GDP growth" in 2021; also, "global supply is slower and will likely continue to be relatively flat."
He predicted that WTI would reach $50 in the second half of 2021.