Oil prices edged up on Tuesday helped by expectations that OPEC and its allies would tighten supplies next year and supported by news of a second possible COVID-19 vaccine.
“Oil prices enjoy modest gains this morning, as enthusiasm over a new, seemingly more efficient, vaccine has led a new price rally,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.
“Now all eyes are on possible leaks from today’s OPEC+ technical meeting,” he added.
OPEC+, which groups the Organization of the Petroleum Exporting Countries, Russia and others, holds a ministerial committee meeting on Tuesday that could recommend changing quotas when all the ministers meet on Nov. 30 and Dec. 1.
OPEC+ revised its scenarios for 2021 with demand seen weaker than previously anticipated, a confidential document seen by Reuters showed, a revision that supports the case for tightening supply policy next year.
Brent and WTI have risen more than 10% in the last six days after Pfizer said its COVID-19 vaccine was more than 90% effective. Prices had a further boost this week when Moderna said its vaccine was 94.5% effective.
“Developments with regards to a vaccine are constructive for oil demand in the medium to long term. However, for the near term it changes little, with still plenty of concern over the demand impact from the latest wave of COVID-19,” said ING commodity strategists Warren Patterson.
Oil prices remain under pressure as many Western governments have imposed new lockdowns due to a second wave of the virus.
But China’s crude oil throughput in October rose to its highest level, underpinning a fast demand recovery.
“Oil demand in China is exceeding pre-COVID-19 levels which suggests oil demand is not permanently impaired,” analysts from Bernstein Energy said, saying this supported data indicating “oil demand has not been structurally damaged” by the pandemic.
– Reuters