Oil traders rushed to unwind a bevy of bearish bets after Pfizer announced promising results for its COVID-19 vaccine, shaking up energy markets that were primed for demand to sink into the winter on increased lockdowns and rising coronavirus infections.
Crude prices plunged this year as global demand was crushed due to travel restrictions to curb the spread of COVID-19. Coming into this week, investors have been betting heavily on further weakness in prices as worldwide infections surpassed 50 million and numerous countries re-imposed lockdowns to slow the virus’s spread.
That changed on Monday morning, when Pfizer said its vaccine was more than 90% effective in preventing COVID-19, sending equity and commodities markets surging. Brent crude surged by 7% as those holding short positions rushed to reverse them to hold down losses, with more front-month contracts traded Monday than any day since April.
To be sure, there are still headwinds for the oil market. The Organization of the Petroleum Exporting Countries may elect to increase supply if a recovery seems imminent, and the vaccine will not be available widely until at least next year. Infections are rising rapidly, particularly as the winter rolls into the Northern Hemisphere.
“The timing of a global roll-out of any vaccine is further down the road than some believe, so it will take a long time to apply it to the global population,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
The number of unsold Angolan cargoes for December loading is coming down, traders said on Monday, while the Nigerian market was weaker due to competing supplies.
Differentials for Nigerian bbls are coming under downward pressure due to competition in Europe from higher Libyan output plus U.S. crude exports.
* Bonny Light for December loading was being offered at dated Brent parity, a source said, down 10 cents from Friday’s assessment.
The Prices are as follows:
(1)Dated Brent =$41.31/bbl (3.010)
(2)Bonny Light =$41.945/bbl (2.860)
(3)QuaIboe =$41.895/bbl (2.860)
(4)Forcados =$42.045 /bbl (2.860)
Premium unleaded pms= $375.75/MT (26.25)
0.1% Gasoil=$336.75/MT (22.25)
Clean Tanker freight UKC-WAF= $12.09/mt (0)