Brent Climbs to 4-Month High of $44 on Vaccine Hope

By Adedapo Adesanya

The Brent crude hit a four-month high of $44 per barrel on Tuesday as the market was bullish, thanks to promising results in a coronavirus vaccine trial and the European Union (EU) reaching a historic stimulus package deal after five days of marathon talks.

The international benchmark rose 72 cents or 1.63 per cent to trade at $44.02 per barrel, while the US West Texas Intermediate (WTI) crude gained 75 cents or 2.33 per cent to trade at $41.76 per barrel.

The oil market got a boost after EU leaders came to an agreement on a €750 billion ($858 billion) stimulus package on Tuesday. The measure aims to lift the coalition from coronavirus-fueled economic downturns through low-interest loans and grants.

Both benchmarks reached their highest levels since March 6 this year, when the leader of the Organisation of the Petroleum Exporting Countries (OPEC), Saudi Arabia, and leader of its allies, Russia, failed to reach a deal on how to manage oil supply to the market that had started to show worrying signs that the pandemic would wipe out a lot of demand as lockdowns started in Europe.

This led prices to fall more than half of what they had traded earlier in the year.

Also supporting prices yesterday was the news from Monday that a phase 1 trial of a vaccine being developed by the University of Oxford which showed that the vaccine raised no safety concerns and did not lead to any unexpected symptoms in those who received it, and was very similar to other vaccines of this type.

With surging coronavirus cases in many countries, including the United States, and fears that a second COVID-19 wave could prompt new localized lockdowns, the markets welcomed the vaccine development news.

Investors are also hoping a slowdown in US virus case growth signals any possible halt to the virus’ recent resurgence.

According to reports, US states California, Georgia, and North Carolina all reported a decrease in the pace of new COVID-19 cases, renewing hope that travel activity might return soon and this will help oil demand.

The next direction for oil prices will come from the industry estimates of US commercial oil inventories due to be released by the American Petroleum Institute (API) and the Energy Information Administration (EIA).