By Adedapo Adesanya
Brent crude marked a second-day rise on Tuesday as it moved closer to $44 per barrel as the announcement of a potential coronavirus vaccine renewed the confidence investors have in the oil market.
As a result of this, the price of the global benchmark oil increased by 25 cents or 0.57 per cent to $43.86 per barrel, while the value of the United States’ West Texas Intermediate (WTI) crude went up by 31 cents or 0.75 per cent to $41.67 per barrel.
On Monday, oil prices recorded the biggest daily growth in more than five months after drugmakers, Pfizer and BioNTech, said an experimental COVID-19 treatment was more than 90 per cent effective based on initial trial results.
This renewed investors confidence in the commodity as mass rollouts of the vaccines are likely to be months away though subject to regulatory approvals.
This is especially good as a vaccine for COVID-19 means people can now move around and travel freely, boosting the demand for oil again.
The premise of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) extending supply cut if demand slumps before the vaccine is available has also continued to buoy the market.
The cabal agreed to cut supply by 7.7 million barrels per day from August through December and then ease the cuts by around 2 million bpd in January initially but with renewed lockdown mostly in Europe, fuel demand has tanked, opening the need for an extension of the deal.
Yesterday, the American Petroleum Institute (API) reported a major draw in US crude oil inventories of 5.147 million barrels for the week ending November 6, boosting the price of oil.
This data, however, will be affirmed by the more trusted one from the Energy Information Administration (EIA) which will be released later today.
According to the EIA, oil production fell in the previous week, continuing its changing outcome as it bounces between 9.7 million bpd and 11.1 million barrels per day
Meanwhile, the double-barreled problem of lockdowns and rising Libyan oil production continued to pose huge threats on prices of the black gold.
The North African country has boosted its oil production to more than 1 million barrels a day. The OPEC member, which is Africa’s largest crude reserves, ramped up production in the past six weeks amid a truce between rival military forces.
It was pumping about 800,000 barrels a day last week, but the National Oil Corporation said that output now exceeds the million-barrel level since January.
It was producing less than 100,000 barrels a day in early September and this development has taken oil traders by surprise and weakened prices just as renewed coronavirus lockdowns in Europe and accelerating cases in the US clamped down on fuel use.
