It was the announcement that crude traders had been waiting for months to hear: Pfizer on Monday said its experimental vaccine was more than 90 percent effective in preventing Covid-19, and with its approval for emergency use seemingly imminent, oil prices skyrocketed by over 8 percent.
Prices were also supported by Saudi Arabia suggesting that it could take more barrels off the market over winter if need be and before the vaccine is widely available.
Brent on Monday settled at $42.40 per barrel, up $2.95, or 7.48 percent, while West Texas Intermediate settled at $40.29 per barrel, soaring $3.15, or 8.48 percent.
John Kilduff, founding partner at Again Capital, acknowledged that an effective vaccine will spell the end of the pandemic and a return to unobstructed demand recovery: "Oil particularly reacted to the news because of what it means: the pandemic is hitting transportation terrifically and 80 percent of crude oil barrels go to transportation fuel, so I think this is a logical response."
Meanwhile, cautiously optimistic news was delivered on Monday by Keisuke Sadamori, director for energy markets and security at the International Energy Agency: while he noted that government-imposed lockdowns in Europe to slow infection rates may push demand to the downside, he stopped short of saying his group would formerly lower its price forecast.
He added, "We certainly expect this time for there to be a lower impact than the last lockdown ... This time schools are kept open and some of the stores are still open."
Sadamori went on to note that China is on track to be the only major country to boost its year-on-year demand for oil.
In other news, Dharmendra Pradhan, oil minister for India, said his country's fuel demand has almost recovered to pre-Covid and the nation will experience the fastest growth in energy consumption among all large economies in the coming decades.
He added that India's share of global energy consumption is expected to rise from 7 percent now to 12 percent by 2050.
Finally, although Citi Research on Monday cut its 2021 oil price forecasts for Brent and WTI by $5 to $54 and $49 respectively due to alarm over rising infection rates, it said tighter supply from the Organization of the Petroleum Exporting Countries and its allies would still lead to a gradual uptick in prices next year.