NEW YORK (Nov 11): Oil ended nearly 3% higher on Tuesday as hopes that a COVID-19 vaccine is on the horizon outweighed worries about a drop in fuel demand from new lockdowns to contain the virus.
Brent crude futures settled up $1.21, or 2.9%, at $43.61 per barrel. U.S. West Texas Intermediate (WTI) crude futures gained $1.07, or 2.7%, to $41.36.
Both contracts jumped 8% on Monday, their biggest daily gains in more than five months, after drugmakers Pfizer and BioNTech said their experimental COVID-19 treatment was more than 90% effective based on initial trial results.
Oil bounced again Tuesday afternoon after the director of the U.S. National Institute of Allergy and Infectious Diseases, Anthony Fauci, said doses of the vaccine will be available for people at the highest priority in December.
"This implies that at some point in next year, people may be able to go on vacation, which means we will see a greater demand for jet fuel," said Bob Yawger, director of energy futures at Mizuho.
"For the energy complex this is the best thing since sliced bread," he added. Mass rollouts, however, are likely to be months away and subject to regulatory approvals.
In the meantime, renewed lockdowns in Europe and rising coronavirus cases in the United States are still hurting fuel demand, however.
"The rising counts could associate with more intense business lockdowns and work at home trends that have forced a sharp curtailment in U.S. driving habits," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
Traffic in London, Paris and Madrid fell sharply in November after a peak in October, according to data provided to Reuters by location technology company TomTom for mobility until Sunday evening.
There were more than 59,000 COVID-19 patients in hospitals across the United States on Monday as U.S. coronavirus cases surged to more than 10 million.
Prices were also boosted by comments from Saudi Arabia's energy minister, who on Monday said that the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, could tweak their supply pact if demand slumps before the vaccine is available.
OPEC+ agreed to cut supply by 7.7 million barrels per day (bpd) from August through December and then ease the cuts by about 2 million bpd in January.
Source: The Edge Markets