Oil firms as it heads for third weekly rise on vaccine optimism

London — Oil prices firmed on Friday, and were on track for a third consecutive weekly rise, buoyed by successful Covid-19 vaccine trials, but renewed lockdowns in several countries to limit the spread of the virus capped gains.

Prospects for effective Covid-19 vaccines and hopes that oil cartel Opec and its allies, including Russia (Opec+), will keep production in check have bolstered oil markets this week.

Brent crude futures were up 28c, or 0.6%, at $44.48 a barrel at 10.27am GMT.

The more active US West Texas Intermediate (WTI) January crude contract gained 17c, or 0.4%, to $42.07 a barrel. The WTI contract for December, which expires on Friday, was up 2c at $41.76.

Both benchmarks are up more than 4% so far this week.

“Concerns about demand, which have been weighing on prices since the spring, are now giving way to hopes of economic recovery, thanks in part to the imminent rollout of vaccines.” Commerzbank said.

Prices also found support from expectations that Opec+ will delay a planned production increase.

The group, which meets on November 30 and December 1, is looking at options to delay the tapering of their 7.7-million barrel per day (bpd) cuts by about 2-million bpd by at least three months from January.

“An assumed roll-over of current cuts by Opec+ to the first quarter of 2021 is probably in today’s price of $44,” Nordic bank SEB said.

Oil prices were getting some support from signs of movement on a stimulus deal in Washington after US Senate Republican majority leader Mitch McConnell agreed to resume discussions on providing more Covid-19 relief as cases surge across the US.

Oversupply concerns, however, continue to weigh as Libya has raised production to pre-blockade levels of 1.25-million bpd. 

Reuters