Oil Falls Following Sharp Rise in Hopes for COVID-19 Vaccine By Investing.com

By Adam Claringbull

Investing.com – Oil was down in Asia Tuesday morning, missing some of Monday’s big gains. Prices had risen more than 8% on positive news from a major COVID-19 vaccine trial.

It fell 1.23% to $ 41.88 at 12:22 am ET (4:22 am GMT) and slid 1.56% to $ 39.66.

Markets around the world surged yesterday thanks to news from Pfizer (NYSE 🙂 COVID-19 vaccine trials suggesting a 90% effectiveness rate. Brent and WTI futures both traded above the $ 40 mark early in the sessions, with WTI futures since falling back below the price mark.

However, the reality of short-term demand concerns pushed prices back a bit in Asia on Tuesday morning, as the vaccine has yet to prove other key points such as safety and duration of immunity conferred.

“A viable vaccine is unequivocally revolutionary for oil, a market where half of the demand comes from the movement of people and things,” JP Morgan said in a note. “But as we have written previously, oil is a spot asset that must first eliminate current supply and demand imbalances before prices can rise in one to two years.”

The COVID-19 pandemic continues to sweep across the world, with lockdowns in Europe and cases on the rise in the US, where total cases have exceeded 10 million and new cases daily over 120,000, according to data from the Johns Hopkins University. As such, the outlook for global demand remains bleak and is likely to get much worse before improving.

“The acceleration of multiple vaccines does not mitigate the risk that many US states will have to revert to some kind of lockdown this fall / winter,” Rystad Energy’s head of oil markets, Bjornar Tonhaugen, told Reuters.

Prices received a boost from Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, who said on Monday that the Organization of the Petroleum Exporting Countries and its allies (OPEC +) could further regulate its production if necessary. OPEC + will meet shortly on November 30 and December 1.

“If the oil market continues to rally between now and the OPEC + meeting at the end of the month, it could backfire as some members may become more reluctant to carry over the current cuts into next year, leaving the market vulnerable for the next year. year. first quarter of next year, ”said ING economists in a note.

However, concerns that the incoming US presidential administration may allow more Venezuelan and Iranian oil to return to the global market are also negative factors on the supply side.

Investors wait now, which expire later in the day.