Brent crude rose by $3.41, or 8.6%, to $42.86 a barrel by 1:02pm GMT on Monday, while US West Texas Intermediate crude was up by $3.57, or 9.6%, at $40.71.
“Asset prices move faster than the real economy, and oil and other risk assets are reacting positively today to the Pfizer vaccine news,” upstreamonline.com quoted BNP Paribas analyst Harry Tchilinguirian, as saying.
Pfizer said its experimental vaccine was more than 90% effective in preventing Covid-19, based on initial data from a large study.
Saudis provide support Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said the Opec+ deal on oil output cuts could be adjusted if there was consensus among members of the group.
The Saudi minister was commenting after being asked whether Opec+ — which groups Opec states, Russia and other producers — would stick to existing cuts of 7.7 million barrels per day rather than easing them to 5.7 million bpd from January.
Key members of Opec are wary of US President-elect Joe Biden relaxing measures on Iran and Venezuela, which could mean an increase in oil production that would make it harder to balance supply with demand.
“While a Biden presidency increases the likelihood of Iranian oil supply returning to the market, this is not something that will happen overnight, and we still believe it’s more likely an end of 2021/2022 event,” ING said in a note.
Oil prices also found support from a weaker US dollar on the back of Biden’s US election victory, said UBS oil analyst Giovanni Staunovo.
The dollar weakened on Monday, hitting a 10-week low and boosting dollar-priced commodities that become more affordable for buyers outside the US.
China, the world’s top crude importer, reported October imports down 12% from September.
However, renewed European lockdown measures to contain rising Covid-19 cases still appear set to push the outlook for global oil demand toward the downside, an International Energy Agency (IEA) official said.
“Major parts of the European continent are in lockdown. This would surely work toward the negative side,” said Keisuke Sadamori, IEA director for energy markets and security.
Bjornar Tonhaugen, head of oil markets at energy consultancy Rystad Energy, said in a note on Monday afternoon, “In the eyes of traders, a vaccine will help ensure no future lockdowns are needed and will bring people back to the streets, allowing road and air transport to recover.
“Essentially a vaccine is a bullish sign against Covid-19 pessimism. The pandemic is what keeps oil demand from recovering and this is clearly positive news for the market.”
Tonhaugen added, however: “We recommend patience as the news of a vaccine is likely currently taken by the market with an extra grain of bullish sentiment.
“Pfizer may have been sitting on this ‘good market news’ for some time, gingerly awaiting US election results before going public.”