Oil price climbs above $41 as Moderna reports vaccine success

By Elizabeth Low and Alex Longley on 11/16/2020

(Bloomberg) --Oil extended gains in New York as Moderna Inc. reported its Covid-19 vaccine is highly effective against the virus.

Moderna’s shot had efficacy of 94.5% in a preliminary analysis of a large late-stage clinical trial. It follows similar positive developments in a vaccination being jointly developed by Pfizer Inc. last week, buoying commodity prices globally.

Though the full impact of a vaccine on crude demand is still a way off, China’s oil processing rebounded in October to match a record, as consumption in Asia continues to vastly outpace that of regions still afflicted with the virus. Brent’s nearest timespread -- a gauge of market health --reached its strongest since mid-July on Monday, the latest sign that the recovery East of the Suez Canal is offsetting weakness in the West.

Oil capped its biggest weekly advance since early October on Friday after news of Pfizer’s Covid-19 vaccine breakthrough. Though Europe’s demand is wavering as lockdowns re-emerge, the U.S. said it will target local measures rather than nationwide restrictions to tackle the spread of the virus. An OPEC+ committee will assess the health of the market on Tuesday, before a meeting at the end of the month where the group is expected to delay to an output hike planned for January.

“The Brent curve structure continues to firm, global oil inventories continue to decline, a very promising vaccine is on the horizon” and OPEC+ will likely keep supporting the oil market, said Bjarne Schieldrop, chief commodities analyst at SEB AB.

Prices:

  • West Texas Intermediate for December delivery gained 3.9% to $41.68 as of 7:18 a.m. New York time
  • Brent for January settlement rose 3.7% to $44.35

China’s crude refining rose to 14.14 million barrels a day in October, matching a record set in June, as more plants processed oil to replenish inventories after a holiday demand boost. Meanwhile, total petroleum demand in India rose 2.7% last month -- from a year earlier -- the first annual increase since February.

Though India’s fuel consumption was strong in October, it has pulled back slightly at the start of this month. Diesel sales were down 5.1% versus a year earlier, while gasoline was unchanged. There are still signs its crude purchasing is picking up though. Indian Oil Corp. has issued a raft of tenders to purchase West African oil in recent days, while its buying of Nigerian cargoes has gained, traders said.

Other oil-market news:

  • Twitter suspended the account of Iranian Oil Minister Bijan Namdar Zanganeh because it violated rules against impersonation, the company said. An official at Iran’s oil ministry, who asked not to be named, said the ban appeared to be linked to sanctions.
  • Asia Pacific nations including China, Japan and South Korea on Sunday signed the world’s largest regional free-trade agreement, encompassing nearly a third of the world’s population and gross domestic product.

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