Oil gains as vaccine hopes outweigh lockdown impact

By Laura Sanicola NEW YORK (Reuters) - Oil prices rose on Tuesday as hopes that a COVID-19 vaccine could be on the horizon outweighed the expected negative impact on fuel demand from new lockdowns to contain the virus.

Reuters November 11, 2020 00:07:11 IST
Oil gains as vaccine hopes outweigh lockdown impact

Oil gains as vaccine hopes outweigh lockdown impact

By Laura Sanicola

NEW YORK (Reuters) - Oil prices rose on Tuesday as hopes that a COVID-19 vaccine could be on the horizon outweighed the expected negative impact on fuel demand from new lockdowns to contain the virus.

Brent crude futures rose 65 cents, or 1.5%, to $43.05 by 11:30 EDT (1530 GMT), while U.S. West Texas Intermediate (WTI) crude futures gained 68 cents, or 1.7%, to $40.97.

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.

Mass rollouts, however, are likely to be months away and subject to regulatory approvals.

Prices were also boosted by comments from Saudi Arabia's energy minister, who on Monday said that the Organization of the Petroleum Exporting Countries (OPEC) 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.

However, the negative impact that renewed lockdowns in Europe are having on fuel demand and an increase in coronavirus cases in the United States are keeping prices in check.

"When the European lockdowns were announced, I never saw sentiment in oil turn so negative so quickly," said John Kilduff, partner at Again Capital LLC in New York.

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.

"The petroleum complex needs the vaccine - full stop," Kilduff added.

There were just over 59,000 COVID-19 patients in hospitals across the United States on Monday as U.S. coronavirus cases surged to more than 10 million.

"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.

Global oil demand is likely to be around 96 million bpd in the winter months before rising to 101 million bpd in the fourth quarter of 2021, bringing it close to levels at the end of 2019, Vitol CEO Russel Hardy told the Reuters Commodities summit.

(Additional reporting by Ahmad Ghaddar, Sonali Paul and Seng Li Peng; Editing by Susan Fenton, David Goodman and David Gregorio)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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