Oil hit its highest since March in energy commodities on Tuesday, rising towards $47 a barrel. A third promising coronavirus vaccine spurred hopes of a quicker recovery in economic growth and oil demand in 2021.
AstraZeneca on Monday said its COVID-19 shot was 70% effective in trials. Moreover, it could be up to 90% effective, giving the fight against the pandemic a third vaccine. Positive results from Pfizer/BioNTech and Moderna came first.
By 0914 GMT, Brent crude rose 31 cents, or 0.7%, to $46.37 a barrel. It hit a session high of $46.72, its highest since March 6.
U.S. West Texas Intermediate crude was up 32 cents, or 0.7%, to $43.38.
Tamas Varga of broker PVM said the fight against the coronavirus is intensifying and is proving to be increasingly successful. Next year’s oil demand estimates are bound to be amended upwards, he added.
This is Brent’s highest since a price war between Saudi Arabia and Russia. That was when the demand that was starting to crater due to the pandemic in March sent prices crashing. Both benchmarks settled up about 2% on Monday following some 5% gain last week.
A Transition to the New Administration
On Monday, U.S. President Donald Trump allowed officials to proceed with a transition to Joe Biden’s administration. This move is also supporting oil as well as wider financial markets.
With a Biden presidency thought of as more international trade-friendly, markets have assumed that consumption in 2021 will rise again. This was a statement from Jeffrey Halley of brokerage OANDA.
Also adding support were expectations that U.S. crude inventories edged lower last week. This week’s first U.S. supply report from the American Petroleum Institute (API) is due at 2130 GMT.
After the price war in March, the OPEC+ agreed to record high output cuts to support prices.
OPEC+ is expected to roll over current cuts into next year at meetings on Nov. 30-Dec. 1. This will follow technical talks this week.
Meanwhile, in precious metals, gold was down in Asia on Tuesday. More vaccine good news arrives. In addition, U.S. business activity rises at the quickest rate in the past five years.
The greenback and risk-on activity are drawing investor interest away from the safe-haven yellow metal.
By 12:56 AM ET (4:56 AM GMT), gold futures were down 0.90% at $1,821.25.