Covid vaccine hopes lift oil prices surge to 8-month high

AstraZeneca on Monday said its COVID-19 vaccine was 70% effective in trials and could be up to 90% effective, giving the fight against the pandemic another potential vaccine after positive results from Pfizer-BioNTech and Moderna. Both contracts were at their highest since early March after having rallied almost 10 per cent in the last four days.

Brent crude futures rose 63 cents, or 1.4%, to US$45.59 a barrel by 0733 GMT while U.S. West Texas Intermediate crude gained 49 cents, or 1.2%, to US$42.91 a barrel. Lower gravity oil tends to produce more fuel oil after refining while higher gravity crudes tend to produce more higher-value products such as gasoline and diesel fuel when refined.

Brent crude rose $1.16, or 2.5%, to $47.22 a barrel by 1445 GMT and hit a session peak of $47.23, its highest since March 6.

"The petroleum complex is the vaccine trade", said John Kilduff, partner at Again Capital in NY.

That makes it likely that OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russian Federation, will continue production cuts into 2021 after a meeting set to start on November 30 following technical talks this week.

Covid-19: Oxford University vaccine is highly effective
No serious adverse health events related to the ChAdOx1 nCov-2019 vaccine were seen in the participants. Sometimes they'll include recommendations for other related newsletters or services we offer.

The bank sees a coordinated move to restrict output as the best near-term action for oil prices, given the high levels of crude inventories, Libya's production recovery, and a new wave of coronavirus infections leading to renewed partial lockdowns.

United States crude oil inventories likely edged lower last week, while distillate stockpiles were seen decreasing for a 10th straight week, a preliminary Reuters poll showed on Monday, ahead of reports from the American Petroleum Institute and the Energy Information Administration (EIA). The enthusiasm has pushed both Brent and WTI futures well above the $40 mark.

Also supporting oil and wider financial markets, U.S. President Donald Trump on Monday allowed officials to proceed with a transition to Joe Biden's administration.

Goldman expects OPEC+ to delay its production ramp-up for three months, helping bring the global market deficit back to 1 million barrels per day in the first quarter of 2021. Investors will focus on whether the discussions will lead to an extension of current production cuts as ever-growing numbers of COVID-19 cases globally cut demand.

(Fuel Oil, means 380 HS and VLSFO together).