Oil up on hopes for delay to supply increase, vaccine

Crude contracts jump $1 after Pfizer finds its Covid vaccine 95% effective

LONDON:

Oil prices firmed on Wednesday on hopes Organisation of the Petroleum Exporting Countries (OPEC) and its allies will delay a planned increase in oil output and after Pfizer said its Covid-19 vaccine was more effective than previously reported.

Brent crude rose $0.82, or 1.9%, to $44.57 a barrel by 1211 GMT, while US West Texas Intermediate crude gained $0.76, or 1.8%, to $42.92.

Both contracts jumped by about $1 after Pfizer said on Wednesday final results from the late-stage trial of its vaccine showed it was 95% effective. Last week, it had put the efficacy at more than 90%.

Moderna Inc said on Monday that preliminary data for its vaccine also showed it was almost 95% effective.

“Oil prices are modestly rising on hopes that OPEC+ will decide to postpone its planned production increase in January and on the latest vaccine euphoria,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.

To tackle weaker energy demand amid a second wave of the pandemic, Saudi Arabia called on fellow members of the OPEC+ group to be flexible to meet market needs and to be ready to adjust their agreement on output cuts.

OPEC+, comprising OPEC, Russia and other producers, met on Tuesday but made no formal recommendation before the group’s full ministerial meeting on November 30-December 1 to discuss policy.

Members of OPEC+ are leaning towards delaying the current plan to boost output in January by 2 million barrels per day (bpd), sources have said. They are considering a possible delay of three or six months.

Crude prices recovered from an earlier slide after the American Petroleum Institute (API) said on Tuesday US crude stockpiles rose by 4.2 million barrels last week.

Official data from the Energy Information Administration is due to be released later on Wednesday.