Oil prices rose more than 1% on Monday, extending last week’s gains as traders anticipated coronavirus vaccine trials would spur a recovery in demand. Sentiment was also bolstered by expectations that the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, a group known as OPEC+, would extend a deal to restrain output.
Brent crude rose 66 cents to $45.62 a barrel by 1247 GMT while U.S. West Texas Intermediate crude gained 52 cents to $42.94 a barrel. Both benchmarks jumped 5% last week. The contango structure in the market, whereby the prices of front-month delivery contracts are lower than those for delivery six months later, narrowed to as little as 31 U.S. cents, its smallest since mid June, reflecting traders’ views a sustained glut is receding.
Outlook for demand has improved with news indicating progress towards developing COVID-19 vaccines. A U.S. official said the first inoculations in the United States could start a day or two after regulatory approval was secured.
On the supply side, OPEC+, which meets on Nov. 30 and Dec. 1., will look at options to extend its deal on output cuts by at least three months from January. Smaller Russian oil companies are still planning to pump more crude this year, a group representing the producers said.
Oil prices rise on COVID-19 vaccine news, Reuters, Nov 23
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