Oil prices rose 1% on Monday, extending gains as traders eyed a recovery in crude demand due to successful coronavirus vaccine trials, and concerns over tensions in the Middle East.
The sentiment was also bolstered by hopes that the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, a group known as OPEC+, will continue to restrain production.
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. Both benchmarks jumped 5% last week.
“Positive sentiment continues to be driven by the recent good news about the efficacy of coronavirus vaccines in development and the expectation that the OPEC+ meeting at the end of this month could see the group extend current cuts by 3-6 months,” said Stephen Innes, Chief Global Markets Strategist at axi, a financial services firm.
British drugmaker AstraZeneca said on Monday its vaccine for the novel coronavirus, developed along with the University of Oxford, could be around 90% effective under one dosing regimen.
U.S. healthcare workers and others recommended that the nation’s first COVID-19 inoculations could start getting shots within a day or two of regulatory consent next month, a top official of the government’s vaccine development effort said on Sunday.
OPEC+, which meets on Nov. 30 and Dec. 1, is looking at options to delay by at least three months from January the tapering of their 7.7 million barrel per day (bpd) cuts by around 2 million bpd.
But smaller Russian oil companies are still planning to pump more crude this year despite a global deal to cut production as they have little leeway in managing the output of start-up fields, a group representing the producers said on Friday.
Yemen’s Iran-aligned Houthi group on Monday said it fired a missile that struck a distribution station operated by the Saudi Aramco oil company in Saudi Arabia’s Red Sea city of Jeddah.
There was no immediate Saudi confirmation of the claim made by the group’s military spokesman. Aramco’s oil production and export facilities are mostly in Saudi’s Eastern Province, more than 1,000 km across the country from Jeddah.