Oil was up on Tuesday morning in Asia as a rollout of at least one COVID-19 vaccine within the next month looks increasingly certain, promising increased demand in the new year. Also, the U.S. presidential transition is finally underway, offering political certainty.
Brent oil futures rose 0.83% to $46.42 by 04:01 AM GMT and WTI futures jumped 0.91% to $43.45.
Oil has reached its highest price since March on the back of the likelihood of a vaccine being rolled out within the next month. There are currently three viable vaccines, with AstraZeneca PLC adding its candidate to those of Pfizer Inc and Moderna Inc . The U.S. has said that it will hopefully begin a vaccination program by Dec. 12.
Investors are looking toward a strong build in demand once the global economy starts to recover from the COVID-19-caused economic slump of the last year. The enthusiasm has pushed both Brent and WTI futures well above the $40 mark.
“The firming of the oil futures curve is a sign that the market expects a rapid tightening of supplies ahead … the move higher has been one of the largest in recent years,” RBC analysts Michael Tran and Helima Croft wrote in a report.
A second, major positive for oil is that U.S. President Donald Trump has finally given the go-ahead for the official transition to President-elect Joe Biden’s administration to proceed. The Trump administration had been refusing to authorize access to essential government information and funding for the incoming administration.
The markets anticipate the Biden administration to be much more supportive of COVID-19 relief measures, and more proactive in driving a U.S. economic recovery.
OPEC+ is also gearing up for its full ministerial meeting, due to take place from Nov. 30 to Dec. 1. Investors will focus on whether the discussions will lead to an extension of current production cuts as ever-growing numbers of COVID-19 cases globally cut demand.
Crude oil supply data from the American Petroleum Institute is due later in the day.