By Eurasia Business News – November 24, 2020
Oil platform – Source : Pixabay
Oil price continued to rise on Tuesday amid increased optimism about energy demand due to the success of several pharmaceutical companies in the development of vaccines against COVID-19.
On November 23, it became known that the vaccine developed by the British pharmaceutical company AstraZeneca and the University of Oxford showed an average efficacy of 70% according to the results of interim trials in the UK and Brazil. At the same time, one of the tested dosage options gave a significantly higher efficiency: about 90%.
In addition, the American Pfizer and German BioNTech filed on November 20 a request for emergency use in the United States of their vaccine against COVID-19. The process before the US Food and Drug Administration will take few weeks.
As a result, the cost of January futures for Brent oil on the London stock exchange ICE Futures on Tuesday reached $ 47.72 per barrel, which is higher than the price at the close of the previous session. As a result of trading on Monday, these contracts rose by $ 1.1 (2.5%) – up to $ 46.06 per barrel, which is the maximum since March 5. On September 27 the futures for Brent crude oil were traded at $ 41.61 per barrel.
The price of WTI crude oil futures for January in electronic trading of the New York Mercantile Exchange (NYMEX) amounted to $ 44.82 per barrel on November 24 at 2:50 PM East which is higher than the level of previous trading. On Monday, futures rose in price by $ 0.64 (1.5%) – to $ 43.06 per barrel, the highest since August 26.
Oil prices have every reason to jump as the announced vaccines are a big deal generating optimism for 2021 and the global economic recovery. The Asia-Pacific countries have already started to recover from the pandemic, after a sharp contraction in the second quarter of 2020. Last week they signed the largest free-trade zone agreement, weighing for 2.2 billion people and 30% of world economic output ($ 26.2 trillion).
According to the International Monetary Fund, the Asia-Pacific economic activity is expected to contract by 2.2 percent in 2020, due to a sharper than expected downturn in key emerging markets and to grow by 6.9 percent in 2021. With these forecasts it appears likely that oil prices will continue to rise.
The main part of the developed world will be able to vaccinate citizens at risk of the COVID-19 pandemic by the spring and possibly fully vaccinate the population by the middle of next year.
The US, UK and Germany announced plans to begin vaccinations against coronavirus in their countries in December, while Spain said it would start administering the vaccine to its citizens in January.
Vaccine optimism is boosting traders’ sentiment despite European lockdowns and the fact that coronavirus cases in the US have already surpassed 12 million
However, the continuing increase in the coronavirus incidence in the United States is likely to limit activity on Thanksgiving (November 26). Therefore there would be no increase in fuel demand for this time of year.
Meanwhile, Saudi Arabia has confirmed the reports that appeared on the eve of an attack on one of the facilities of the Saudi Aramco oil company by the Yemeni Houthis. The attack set fire to an oil reservoir at a Saudi Aramco distribution station in Jeddah, the Saudi Energy Ministry. Yemen’s Houthi forces, supported by Iran, fired a missile against the facility. The confrontation between Saudi Arabia and Iran through proxies in Yemen and in the region contributed to higher oil prices over the past years.
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