London: Oil prices jumped more than 4% on Monday, offsetting losses from the previous session after Moderna said its experimental vaccine is 94.5% effective in preventing Covid-19.
January Brent crude futures rose $ 1.79, or 4.2%, to $ 44.57 a barrel, by 2.20 pm, while US West Texas Intermediate crude for December rose $ 1.84, or 4.6%, to $ 41.97.
“The vaccine euphoria has already been heavily priced since last week, but the second treatment for Covid-19 shows that the large-scale vaccination program, in sufficient quantities for the world’s population, is somewhat closer now,” said Rystad Energy analyst Louise Dixon.
Moderna’s announcement comes after Pfizer Inc reported last week that its vaccine was more than 90% effective, raising hopes that the damage caused by the epidemic could be reduced to the global economy.
Prices were also boosted by data showing recovery in China and Japan, as figures showed that Chinese refineries handled daily record levels of crude oil in October.
Both WTI and Brent crude rose more than 8 percent last week in the hope of getting a vaccine and he expected the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, to keep production low next year to support prices.
The group, known as OPEC +, had cut production by about 7.7 million barrels per day, with compliance expected at 96% in October, and had planned to increase production by 2 million barrels per day from January.
OPEC + is due to hold a ministerial committee meeting on Tuesday that may recommend changes to production quotas when all ministers meet on November 30 and December 1.
“It is undeniable that the oil market is completely in OPEC + hands,” said SEB chief commodity analyst Bjarne Schieldrop.
The organization is the only reason why oil prices today are not $ 20 per barrel. As such, their next meeting on 30 November – 1 December is no less important. “