Oil prices rose on Tuesday as hopes that a COVID19 vaccine could be on the horizon outweighed the expected negative impact on fuel demand of new lockdowns to curb the virus.
Brent crude futures rose 45 cents, or 1.1, to 42.85 by 1030 GMT, while U.S. West Texas Intermediate WTI crude futures gained 34 cents, or 0.8, to 40.63.
Both contracts jumped 8 on Monday, in their biggest daily gains in more than five months, after drugmakers Pfizer and BioNTech said an experimental COVID19 treatment was more than 90 effective based on initial trial results.
Mass rollouts, however, are likely to be months away and subject to regulatory approvals.
A viable vaccine is unequivocally gamechanging for oil a market where half of demand comes from moving people and things around, JP Morgan said in a note.
But as we have written previously, oil is a spot asset that must first clear current supply and demand imbalances before onetotwoyear out prices can rise.
Prices were also boosted by comments from Saudi Arabias energy minister, who said on Monday the Organization of the Petroleum Exporting Countries OPEC and its allies, together known as OPEC, could tweak their supply cut pact if demand slumps before the vaccine is available.
OPEC 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.
But the negative impact that renewed lockdowns in Europe are having on fuel demand, as well as rising Libyan…