On Tuesday Oil prices went higher as we are expecting that OPEC and its allies will extend oil production cuts for at least three months, while sentiment was strengthened by news of another promising coronavirus vaccine. Brent crude futures for January rose 16 cents, or 0.4%, to $43.98 a barrel by 0104 GMT and U.S. West Texas Intermediate crude for December added 13 cents, or 0.3%, to $41.47 a barrel.
After Moderna Inc said its experimental COVID-19 vaccine was 94.5% effective in preventing infection based on interim late-state data, equity markets rose, hoping for an economic recovery. This came when Pfizer Inc reported that the vaccine they had produced was more than 90% effective.
Chief Global Markets strategist Stephen Innes said, “If we judge economic recovery, particularly through the lens of oil markets… with multiple high efficacy vaccines in the pipeline, there is good chance mobility will return close to pre-pandemic levels later in 2021.” OPEC+ is set to hold a ministerial committee meeting today that could suggest changes to production quotas when all the ministers meet on Nov. 30 and Dec. 1.
According to Reuters, the group is leaning towards postponement of a planned January increase in oil output for at least three months to support prices as the COVID-19 pandemic continues its second wave.
In October China’s crude oil output rose to its highest level, supporting a fast demand recovery in the world’s second largest oil consumer. Analysts from Bernstein Energy said, “Oil demand in China is exceeding pre-COVID-19 levels which suggests oil demand is not permanently impaired.”