Crude Oil Prices Rise on COVID-19 Vaccine Progress

By Adedapo Adesanya

Crude oil reacted positively to the news of headway in possible coronavirus vaccines which were announced simultaneously on Monday.

Brent crude futures gained 14 cents or 0.33 per cent to $43.28 per barrel and US West Texas Intermediate (WTI) crude futures rose 19 cents or 0.34 per cent to $40.67 per barrel.

More than 14.5 million people have been infected by the novel coronavirus globally and more than 604,000 have died of COVID-19, the disease caused by the pathogen, and with rising cases, fuel demand recovery is taking the hit.

However, prices found support after three groups said their potential vaccines showed promising results.

An experimental coronavirus vaccine being developed by AstraZeneca and the Britain’s University of Oxford was safe and produced an immune response in early-stage clinical trials, data showed, keeping alive the hope it could be in use by the end of the year.

More than 150 possible vaccines are in various stages of development with US pharmaceutical company, Pfizer and China’s CanSino Biologics also reporting positive responses for their candidates on Monday.

With good news from all three entities, investors heaved a sigh of relief as nations continue to record rising cases.

Crude has been stuck in a holding pattern this month as a resurgent coronavirus in various parts of the world proves demand weakness could continue.

While fuel demand has recovered from a 30 per cent drop in April after many countries imposed strict lockdowns, usage is still below pre-pandemic levels.

Signals that the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ prepares to unleash crude back onto the market next month are also adding to the negative sentiment.

OPEC+ is set to taper its record production cut of 9.7 million barrels per day to 7.7 million barrels per day from August through December.

Analysts noted that rising infection rates are adding doubt to the idea that demand is going to recover uninterrupted.

In another warning sign for the oil market, Chinese demand is cooling off. A rebound in consumption in the country has helped drive crude higher, but the price of physical oil barrels traded in Asia has slipped with the country’s buying spree slowing in recent weeks.

The price of physical oil barrels traded in Asia has slipped with the country’s buying spree slowing in recent weeks, according to market reports.