This post was originally published on this site
Delil Souleiman/Agence France-Presse/Getty Images
Oil futures soared Monday, extending gains after Pfizer said its vaccine was much better than expected at protecting people from COVID-19 in a crucial study.
The main source of the day’s surge higher “appears tied to vaccine progress, which has long stood out as the single largest source of upside price potential,” said Robbie Fraser, senior commodity analyst at Schneider Electric, in a daily note.
West Texas Intermediate crude for December delivery CL.1, +9.74% CLZ20, +9.74% jumped $3.42, or 9.2%, to $40.56 a barrel on the New York Mercantile Exchange.
January Brent crude BRNF21, +8.64% BRN00, +8.64%, the global benchmark, surged $3.34, or 8.4%, to $42.79 a barrel on ICE Futures Europe.
Front-month prices for both WTI and Brent crude were poised to tally the largest one-day dollar and percentage rise since May 5, according to FactSet data.
“Oil has had an absolutely horrific year with the pandemic hammering demand and, at one point, pushing crude prices negative,” said Craig Erlam, senior market analyst at OANDA, in a note. “Well, that may now change with a vaccine providing a sustainable solution to an utterly horrific problem that has caused carnage across the globe.”
Pfizer Inc. PFE, +8.33% and Germany-based BioNTech SE BNTX, +9.73% said their BNT162b2 vaccine candidate was found to be more than 90% effective in preventing COVID-19 in trial participants without previous evidence of SARS-CoV-2 infection.
The news sparked a global rally in stocks and other assets perceived as risky, while investors dumped traditional havens like Treasurys and gold. Long beaten-down shares of travel-related companies, including airlines and cruise-ship operators, soared.
Oil was slammed late last week as COVID-19 cases continued to surge in the U.S. and Europe. The U.S. counted another 103,657 cases on Sunday, according to a New York Times tracker, exceeding 100,000 for a fifth straight day, with cases surging in the Midwest and South.
Read: Dow, S&P 500 surge by at least 3% to records on coronavirus vaccine reports
Oil’s gains weren’t necessarily all about the vaccine, however, with analysts noting remarks by Saudi Arabia’s energy minister that signaled openness to tweaking the agreement between the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, on production cuts.
Saudi Energy Minister Prince Abdulaziz bin Salman was asked at a conference whether OPEC+ would delay a plan to scale back output cuts in January from 7.7 million barrels a day to 5.7 million barrels a day.
“We did tweak and I believe with consultation with our friends, some of them are present here and some of them are not, but I know how heartily they are committed to the principle of tweaking,” Prince Abdulaziz bin Salman told the conference, according to Reuters.
Still, total OPEC+ oil production rose by 210,000 barrels per day in October to 37.27 million barrels per day, according to a survey conducted by S&P Global Platts.
“War-weary Libya, which is exempt from having an OPEC+ quota as it seeks to put years of war and instability behind it, was largely responsible for the output gains,” according to S&P Global Platts. Libya almost tripled its output to 460,000 barrels a day in October — the country’s highest production since January, it said.
Oil prices also rose as the market saw “some clarity” in terms of the U.S. presidential election outcome, said Fraser.
Democrat Joe Biden has “emerged as the presumptive nominee, with Democrats retaining control of the House, and the senate makeup still uncertain,” he said. “That uncertainty around Senate control could challenge the push for another major stimulus effort near-term. If successful, another round of stimulus efforts would likely prove bullish for commodity prices. ”
Back on Nymex, December gasoline RBZ20, +8.56% also saw sharp gains, tacking on 8.7% to $1.1787 a gallon and December heating oil HOZ20, +7.68% rose 7.7% to $1.2303 a gallon.
December natural gas NGZ20, -0.45% inched down by 0.8% to $2.865 per million British thermal units.
