Oil extended its gain with investors weighing news of another Covid-19 vaccine breakthrough as OPEC+ moved closer to delaying a planned easing of output cuts.
Futures in New York advanced 0.7% following a 3% increase on Monday after Moderna 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 US 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 (JTC) 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.
- West Texas Intermediate for December delivery added 0.8% to $41.66 a barrel on the New York Mercantile Exchange as of 2:26 p.m. Singapore time
- Brent for January settlement gained 0.9% to $44.20 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.