During the U.S. session on Thursday, U.S. and Cloth oil continued to rise, extending intra-day gains to 3% as Cloth oil broke above the $50 mark. The optimistic outlook for the new crown vaccine has boosted market expectations for a recovery in demand in the coming year.
Brent crude futures prices have risen from less than $38/bbl at the end of October to above $50/bbl today, thanks in large part to a series of positive results from the development of the New Crown vaccine, which has raised hopes for an end to the pandemic that has severely damaged demand. Last week OPEC+ reached a compromise on its output policy for 2021, boosting oil prices’ upward momentum this month.
However, supply-side pressures remain, with Libya’s production recovery exceeding all expectations. It is uncertain whether the new crown vaccine will be a panacea for weaknesses on the demand side, and the effects will not be felt until the second half of next year.
Stephen Innes, chief market strategist at Axi, said in a report that optimism about the New Crown vaccine is dominating, boosting oil prices.
The U.S. federal government is expected to begin distributing 2.9 million doses of the new crown vaccine this week once the Pfizer/BioNTech new crown vaccine receives emergency authorization from the U.S. Food and Drug Administration, which the companies could receive as early as Thursday or Friday, according to foreign media reports.
Gustave Perna, the official driving the development of the U.S. New Crown vaccine, said the Pfizer vaccine requires each vaccine recipient to receive two doses of the vaccine at three-week intervals; of the 2.9 million doses the U.S. federal government is expected to begin distributing within the week, the government has also stockpiled 500,000 doses of the vaccine in case of emergencies or problems with the manufacturing process.
Institutional analysis saw Brent rise above $50 per barrel for the first time since March, as the upbeat outlook for the New Crown vaccine boosted market expectations for the coming year. Prior to that, a positive breakthrough in the New Crown vaccine race drove the market sharply higher. In recent weeks, OPEC+ has reached a compromise on a gradual contraction of production cuts next year as the outlook for 2021 solidified.
The futures curve has also suddenly reversed, trading in an inverse spread structure that makes it profitable to trade rolling contracts from one month to the next. This also attracted new money into the market.
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