Oil Prices Jump 7% on Fresh Hope of COVID-19 Vaccine
By Adedapo Adesanya
Oil prices surged by 7 per cent on Monday as news that there could be a coronavirus vaccine soon instilled hopes on the markets that life could soon return to normal.
As a result, the Brent crude soared by 7.05 per cent or $2.78 to $42.23 per barrel while the United States’ futures, West Texas Intermediate (WTI) crude jumped 7.81 per cent or $2.90 to $40.02 a barrel.
The oil market reacted positively to news that a vaccine being developed by Pfizer Inc. and BioNTech SE prevented more than 90 per cent of symptomatic infections in a large-scale study.
This is coming at a time when coronavirus cases continue to surge globally, the prospect of a widely distributed COVID-19 vaccine could jumpstart the weak rebound in consumption.
The companies said they plan to file for Emergency Use Authorization (EUA) to the US Food and Drug Administration (FDA) soon after the required safety milestone is achieved, which is currently expected to occur in the third week of November.
This is a welcome development to the markets which could soon allow a return to a pre-coronavirus way of life and travel, further booming demand for fuel in the process.
Prices were also supported by a weakening US dollar and Joe Biden’s victory in the US election this weekend.
Mr Biden became the 46th US President after defeating incumbent President Donald Trump in a keenly contested election with more than 270 electoral college votes.
The oil market is, however, wary of the President-elect’s policies, including relaxing measures on Iran and Venezuela, which could mean an increase in oil production that would make it harder to balance supply with demand.
The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) also helped boost the market environment when Saudi Arabia said that the current deal could be extended, meaning it is seriously considering such a move.
The group is currently cutting 7.7 million barrels per day and is considering reducing those cuts to 5.7 million barrels per day from January. However, if OPEC+ maintains the current curbs on output, it would tighten supply and lead to higher prices.