Oil hit its highest since March on Tuesday, rising towards $47 a barrel, as a third promising coronavirus vaccine spurred hopes of a quicker recovery in economic growth and oil demand next year.
AstraZeneca said on Monday its COVID-19 shot was 70% effective in trials and could be up to 90% effective, giving the fight against the pandemic a third vaccine. This follows positive results from Pfizer/BioNTech and Moderna.
Brent crude rose 31 cents, or 0.7%, to $46.37 a barrel by 0914 GMT and hit a session high of $46.72, its highest since March 6.
U.S. West Texas Intermediate crude gained 32 cents, or 0.7%, to $43.38.
“The fight against the coronavirus is intensifying and is proving to be increasingly successful,” said Tamas Varga of broker PVM. “Next year’s oil demand estimates are bound to be amended upwards.”
This is Brent’s highest since a Saudi Arabia-Russia price war just as demand was starting to crater due to the pandemic in March sent prices crashing. Both benchmarks settled up about 2% on Monday after gaining about 5% last week.
Also supporting oil and wider financial markets, U.S. President Donald Trump on Monday allowed officials to proceed with a transition to Joe Biden’s administration.
“With a Biden presidency perceived as more international trade-friendly, markets have assumed that consumption in 2021 will rise again,” said Jeffrey Halley of brokerage OANDA.
Expectations that U.S. crude inventories edged lower last week also added support. The first of this week’s U.S. supply reports is due at 2130 GMT from the American Petroleum Institute.
After the price war in March, the Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+, agreed to record high output cuts to support prices.
OPEC+ is expected to roll over current cuts into 2021 at meetings on Nov. 30-Dec. 1, following technical talks this week.
Additional reporting by Jessica Jaganathan; editing by Jason Neely