LONDON: Oil jumped by almost 10% on Monday for its biggest daily gain in almost six months after news of a highly effective Pfizer vaccine against COVID-19 and Saudi Arabia’s assurance that an OPEC+ oil output deal could be adjusted to balance the market.
Brent crude rose $3.41, or 8.6%, to $42.86 a barrel by 1302 GMT while U.S. West Texas Intermediate crude was up $3.57, or 9.6%, at $40.71.
“Asset prices move faster than the real economy, and oil and other risk assets are reacting positively today to the Pfizer vaccine news,” said BNP Paribas analyst Harry Tchilinguirian.
Pfizer said its 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 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 to 5.7 million bpd from January.
Key members of the Organization of the Petroleum Exporting Countries (OPEC) are wary of U.S. President-elect Joe 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.
Oil prices also found support from a weaker U.S. dollar on the back of Biden’s U.S. election victory, said UBS oil analyst Giovanni Staunovo.
The dollar weakened on Monday, hitting a 10-week low and boosting dolar-priced commodities that become more affordable for buyers outside the United Stataes.
China, the world’s top crude importer, reported October imports down 12% from September.
However, renewed European lockdown measures to contain rising COVID-19 cases still appear set to push the outlook for global oil demand toward the downside, an International Energy Agency (IEA) official said.
“Major parts of the European continent are in lockdown. This would surely work toward the negative side,” said Keisuke Sadamori, IEA director for energy markets and security.
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