Oil Steady After Rising on Vaccine Progress



Oil Steady After Rising on Vaccine Progress
Oil was steady near $41 a barrel with investors weighing news of another Covid-19 vaccine breakthrough as OPEC+ moved closer to delaying a planned easing of output cuts.

(Bloomberg) -- Oil was steady near $41 a barrel with investors weighing news of another Covid-19 vaccine breakthrough as OPEC+ moved closer to delaying a planned easing of output cuts.

Futures were little changed following a 3% increase on Monday after Moderna Inc. said its vaccine was almost 95% effective in a preliminary analysis of a large, late-stage clinical trial. Optimism also grew after an OPEC+ panel said the group, which meets again on Tuesday, should consider holding off on boosting production by three to six months.

While the U.S. and Europe tackle rising Covid-19 cases and lockdowns, Asia’s appetite for oil has been showing signs of recovery. China’s economic rebound gathered pace last month while the nation’s crude refining matched a monthly record. Buying of physical crude cargoes has also intensified, with Asian refiners outbidding one another to secure oil in the spot market.

Still, concerns over a resurgent virus and the possibility of more lockdowns continued to rattle producers. The OPEC+ coalition, which is scheduled to increase crude production by almost 2 million barrels a day in January, should delay its output hike because risks for the oil market are skewed to the downside, the group’s Joint Technical Committee said.

“We are seeing a bit of follow-through strength after the Moderna vaccine news, while the recommendation from the JTC to extend current cuts is also providing some support,” said Warren Patterson, head of commodities strategy at ING Group.

A delay to the planned output hike would also go some way to offsetting the increase in supply coming from Libya, which has climbed above 1 million barrels a day.

Prices

  • West Texas Intermediate for December delivery lost 4 cents to $41.30 a barrel on the New York Mercantile Exchange as of 7:45 a.m. London time
  • Brent for January settlement gained 0.2% to $43.89 on the ICE Futures Europe exchange after rising 2.4% on Monday

Brent’s three-month timespread is also signaling that concerns about over-supply are easing. Prices in London traded at 56 cents a barrel in contango -- where prompt prices are cheaper than later-dated ones -- compared with $1.42 at the start of the month.

Other oil-market news:

  • America’s long effort to revive its virus-battered economy has been put on pause -- or thrown into reverse -- across much of the country as new infections soar. California on Monday reinstituted bans on many indoor businesses, while Michigan has ordered a three-week partial shutdown.
  • Former U.S. Secretary of State Henry Kissinger said the incoming Biden administration should move quickly to restore lines of communication with China that frayed during the Trump years, or risk a crisis that could escalate into military conflict. He was speaking at the Bloomberg New Economy Forum.

--With assistance from Dan Murtaugh.

© 2020 Bloomberg L.P.



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