Brent touches $45/bbl on vaccine hopes and U.S. crude drawdown

FILE PHOTO: The sun sets behind a pump-jack outside Saint-Fiacre
FILE PHOTO: The sun sets behind an oil pump outside Saint-Fiacre, near Paris, France September 17, 2019. REUTERS/Christian Hartmann

November 11, 2020

By Jessica Resnick-Ault

NEW YORK (Reuters) – Global oil benchmark Brent rose on Wednesday, briefly touching a more than two-month high above $45 a barrel on hopes of a COVID-19 vaccine that could boost demand and later pulling back as concerns about rising cases overtook bullish news.

Brent <LCOc1> settled up 19 cents, or 0.4%, at $43.80 a barrel, after earlier trading at a session peak of $45.30 – the first time it has cleared the $45 threshold since early September.

U.S. West Texas Intermediate (WTI) crude <CLc1> settled up 9 cents at $41.45, after setting a session high of $43.06.

Both Brent and WTI prices are up about 11% this week after initial trial data showed the experimental COVID-19 vaccine being developed by Pfizer Inc <PFE.N> and Germany’s BioNTech <22UAy.DE> was 90% effective.

Still, concerns about rising cases weighed on the market.

“The record number of cases is enough to snap everyone back to reality,” said Bob Yawger, director of energy futures at Mizuho in New York.

The expectation that a vaccine could restore demand for transportation fuels is critical for oil, said John Kilduff, founding partner at Again Capital.

“Transportation across the board has been so impacted by the pandemic that getting past it would revive demand for those fuels, which is what the petroleum complex needs.”

Renewed restrictions in Europe and the United States to combat the coronavirus have slowed fuel demand recovery, offsetting a rebound in Asian economies where consumption has almost returned to pre-COVID levels.

U.S. crude stockpiles last week fell 5.1 million barrels to about 482 million barrels, industry group data showed on Tuesday, compared with expectations for a reduction of 913,000 barrels in a Reuters poll of analysts. [API/S] [EIA/S]

Government data will be issued on Thursday, delayed a day due to the U.S. Veterans Day holiday on Wednesday.

Algeria’s energy minister said that the Organization of the Petroleum Exporting Countries and allies could extend oil production cuts into 2021, or even deepen them. Saudi Arabia’s energy minister had said on Monday that supply pact could be “tweaked”.

(Additional eporting by Koustav Samanta, Aaron Sheldrick and Noah Browning; Editing by Edmund Blair, David Goodman, Marguerita Choy and Sonya Hepinstall)