Oil futures soared Monday, extending gains after Pfizer said its vaccine was much better than expected at protecting people from COVID-19 in a crucial study.
West Texas Intermediate crude for December delivery jumped $3.26, or 8.8%, to $40.40 a barrel on the New York Mercantile Exchange. January Brent crude, the global benchmark, surged $3.09, or 7.8%, to $42.54 a barrel on ICE Futures Europe.
“Oil has had an absolutely horrific year with the pandemic hammering demand and, at one point, pushing crude prices negative,” said Craig Erlam, senior market analyst at OANDA, in a note. “Well, that may now change with a vaccine providing a sustainable solution to an utterly horrific problem that has caused carnage across the globe.”
Pfizer Inc. and Germany-based BioNTech SE said their BNT162b2 vaccine candidate was found to be more than 90% effective in preventing COVID-19 in trial participants without previous evidence of SARS-CoV-2 infection.
The news sparked a global rally in stocks and other assets perceived as risky, while investors dumped traditional havens like Treasurys and gold. Long beaten-down shares of travel-related companies, including airlines and cruise-ship operators, soared.
Oil was slammed late last week as COVID-19 cases continued to surge in the U.S. and Europe. The U.S. counted another 103,657 cases on Sunday, according to a New York Times tracker, exceeding 100,000 for a fifth straight day, with cases surging in the Midwest and South.
Oil’s gains weren’t necessarily all about the vaccine, however, with analysts noting remarks by Saudi Arabia’s energy minister that signaled openness to tweaking the agreement between the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, on production cuts.
Asked at a conference whether OPEC+ would delay a plan to scale back output cuts in January from 7.7 million barrels a day to 5.7 million barres a day.
“We did tweak and I believe with consultation with our friends, some of them are present here and some of them are not, but I know how heartily they are committed to the principle of tweaking,” Prince Abdulaziz bin Salman told the conference, according to Reuters.