Oil Prices Up on Vaccine and Tanker Blast in Saudi Arabia

Oil prices were up on Monday, pushing Brent back above $50 a barrel. It was supported by hopes that a rollout of COVID-19 vaccines will lift global fuel demand. At the same time, a tanker explosion in Saudi Arabia jangled nerves in the market.

By 0730 GMT, Brent crude futures for February rose 67 cents, or 1.3%, to $50.64 a barrel. Moreover, U.S. West Texas Intermediate (WTI) crude futures for January gained 62 cents, or 1.3%, at $47.19 a barrel.

Prices also rose due to supply jitters. This came after a shipping firm said an oil tanker was hit by an external source. It occurred while discharging at Jeddah port in Saudi Arabia.

Energy Aspects’ analyst Virendra Chauhan said, the market is assessing supply disruption from these incidents versus Iranian (supply) volumes coming back. He said that in the west, the spread of the virus hurt demand and it’s not surprising that prices are choppy.

For six consecutive weeks, Brent and WTI have rallied. This is their longest stretch of gains since June.

The United States began its vaccination campaign against COVID-19. This is supporting hopes that pandemic restrictions could end soon and lift demand at the world’s largest oil consumer.

Also helping financial markets on Monday was an extension of Brexit talks among European powers.

Major European countries remained on lockdown to curb the spread of the virus, reducing fuel demand. Germany, for instance, the fourth largest economy in the world, intends to impose stricter lockdown from Wednesday.

Organization of the Petroleum Exporting Countries Plus

Investors await the outcome of two OPEC+ meetings.

The OPEC+ joint ministerial monitoring committee (JMMC) will meet on Dec. 16. It is what monitors compliance among members. 

On the other hand, OPEC+ will meet on Jan. 4 to study the market. That is after their last decision to limit production rises to 500,000 barrels per day starting next year.

Last week, energy companies in the U.S. added the most oil and natural gas rigs in one week since January. Producers continued to return to the well pad.

Two separate fires occurred. One at Nigeria’s Qua Iboe crude oil export terminal, and another at an oil pipeline in Iran on Sunday. However, the incidents have mostly been contained.

Meanwhile, in precious metals, gold was down on Monday morning in Asia. Investors retreated from the yellow metal amid positive COVID-19 vaccine news.