Brent Crude rose on Wednesday, briefly touching a more than two-month high above $45 a barrel on hopes of a COVID-19 vaccine that could boost demand and later pulling back as concerns about rising cases overtook bullish news.
Reuters reports that global oil benchmark Brent settled up 19 cents, or 0.4%, at $43.80 a barrel, after earlier trading at a session peak of $45.30 – the first time it has cleared the $45 threshold since early September.
U.S. West Texas Intermediate (WTI) crude settled up 9 cents at $41.45, after setting a session high of $43.06.
Both Brent and WTI prices are up about 11% this week after initial trial data showed the experimental COVID-19 vaccine being developed by Pfizer Inc and Germany’s BioNTech was 90% effective.
Still, concerns about rising cases weighed on the market.
Bob Yawger, director of energy futures at Mizuho in New York said: “The record number of cases is enough to snap everyone back to reality”.
John Kilduff, founding partner at Again Capital said the expectation that a vaccine could restore demand for transportation fuels is critical for oil.
“Transportation across the board has been so impacted by the pandemic that getting past it would revive demand for those fuels, which is what the petroleum complex needs.”
Renewed restrictions in Europe and the United States to combat the coronavirus have slowed fuel demand recovery, offsetting a rebound in Asian economies where consumption has almost returned to pre-COVID levels.
Industry group data showed on Tuesday that U.S. crude stockpiles last week fell 5.1 million barrels to about 482 million barrels, compared with expectations for a reduction of 913,000 barrels in a Reuters poll of analysts.
Government data will be issued on Thursday, delayed a day due to the U.S. Veterans Day holiday on Wednesday.
Algeria’s energy minister said that the Organization of the Petroleum Exporting Countries and allies could extend oil production cuts into 2021, or even deepen them. Saudi Arabia’s energy minister had said on Monday that supply pact could be “tweaked”.