Oil jumped on Monday by almost 10%, the highest daily rise in almost 6 month, after Pfizer said its COVID-19 vaccine was very effective, and Saudi Arabia said an OPEC+ deal on output cuts could be adjusted to offset rising supply and weak demand.
Brent crude rose $3.33 cents, or 8.4%, to $42.78 a barrel by 1216 GMT, and U.S. West Texas Intermediate crude was at $40.53, up $3.39 cents, or 9.1%.
Pfizer said the experimental vaccine was more than 90% effective in preventing COVID-19, based on initial data from a large study.
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said the OPEC+ deal on oil output cuts could be adjusted as it has been in the past if there is consensus among members of the group.
The Saudi minister was commenting after being asked whether OPEC+ – which groups OPEC states, Russia and other producers – would stick to existing cuts of 7.7 million barrels per day (bpd), rather than easing them from January to 5.7 million bpd.
Key members of the Organization of the Petroleum Exporting Countries are wary of Biden relaxing measures on Iran and Venezuela, which could mean an increase in oil production that would make it harder to balance supply with demand.
“While a Biden presidency increases the likelihood of Iranian oil supply returning to the market, this is not something that will happen overnight, and we still believe it’s more likely an end of 2021/2022 event,” ING said in a note.
The oil prices also found some support from a weaker U.S. dollar driven by Joe Biden becoming president-elect, said Giovanni Staunovo, oil analyst for UBS.
The dollar weakened on Monday, hitting a 10-week low and boosting commodities priced in the greenback as they became more affordable for investors holding other currencies. [MKTS/GLOB]
China, the world’s top crude importer, reported a 12% decline in October imports compared with September.
– Reuters