Oil hits highest since March collapse on vaccine, Biden transition

OPEC experts meet ahead of next week's crucial gathering

  
Oil refinery. Image used for illustrative purpose.

Oil refinery. Image used for illustrative purpose.

Getty Images

LONDON - Oil hit its highest since in March on Tuesday, rising towards $47 a barrel, as a third promising coronavirus vaccine spurred demand recovery hopes and U.S. President-elect Joe Biden received the go-ahead to begin his transition.

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 51 cents, or 1.1%, to $46.57 a barrel by 1322 GMT and hit a session high of $46.72, its highest since March 6. U.S. West Texas Intermediate crude gained 63 cents, or 1.5%, to $43.69.

"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 the collapse of an earlier OPEC-led output pact, just as demand was starting to crater in March due to the developing pandemic, sent prices crashing. 

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. 

"In the short-term, this is good for markets in general as well as for the oil market," said Bjarne Schieldrop of SEB.

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 previous output pact collapsed leading to a brief Saudi Arabia-Russia price war, OPEC and allies agreed to record high output cuts to support prices.

OPEC+, as the group is known, 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 and Louise Heavens) ((alex.lawler@thomsonreuters.com; +44 207 542 4087; Reuters Messaging: alex.lawler.reuters.com@reuters.net))

More From Commodities