Oil rose, heading for a third weekly gain, as positive Covid-19 vaccine developments offered bulls encouragement about the market’s prospects despite lockdown measures to combat the disease’s spread.
Brent rose as high as $44.78 a barrel. A string of positive vaccine statements has put prices on course for the longest run of weekly gains since June. Still, Americans are being urged not to travel for Thanksgiving, and European road use is once again being depressed because of lockdowns.
As prices push toward the top of a range they’ve been in for months, many of the biggest moves have been in timespreads — the difference in price between futures contracts — that give a sense of traders’ views on how the market might evolve.
With consumption in Asia remaining robust, more immediate spreads have reached their strongest since July. The prospect of a vaccine and producer hedging has caused a significant flattening of the curve for the second half of next year, another sign of expected strength.
“The vaccine news supports our view that world oil demand will move higher over the course of 2021,” said Victor Shum, vice president of energy consulting at IHS Markit. “There is promise of a better time, but the immediate future is grim. There is an alarming rate of new Covid-19 cases in North America and Europe.”
The uncertain recovery path from the virus will be one of the challenges for the Organization of Petroleum Exporting Countries and their allies when they meet in less than two weeks to discuss whether or not to add crude oil to a still-saturated market.
Ahead of the OPEC+ meetings, which could see a possible extension of output cuts by three-to-six months, a buying spree by Asian refiners is complicating the outlook amid surging production from countries such as Libya. Crude stockpiles in China have fallen in five out of the past seven weeks, according to data from Ursa Space Systems.
– Bloomberg