LONDON: Oil prices rose on Thursday, taking this week’s gains to more than 12% on growing hopes that the world’s major producers will hold off from a planned supply increase, though the advance was kept in check by doubts that demand will recover quickly.
Brent crude rose 50 cents, or 1.1%, to $44.30 a barrel by 1456 GMT while U.S. West Texas Intermediate (WTI) crude gained 55 cents, or 1.3%, to $42.
Both contracts were on track for a fourth consecutive daily rise, lifted by hopes that the COVID-19 pandemic could be brought under control after data showed an experimental vaccine being developed by Pfizer Inc and BioNTech was 90% effective.
However, prices remained under pressure after the International Energy Agency (IEA) said that global oil demand was unlikely to receive a significant boost from the vaccine until well into 2021.
“While the vaccine remains the best news received since the virus spread, life won’t return to normal in a matter of days or weeks,” said Hussein Sayed, chief market strategist at FXTM.
Europe is already grappling with surging infections and new social restrictions, while New York ordered bars and restaurants to close early as U.S. cases hit record levels.
Tamas Varga, analyst at PVM Oil said that the oil prices “downside could turn out to be limited, but serious upside potential is unlikely to develop” until exact timing of vaccine availability becomes clearer,
The Organization of the Petroleum Exporting Countries (OPEC) also revised its demand forecast on Wednesday, saying global oil demand will rebound more slowly in 2021 than previously thought because of rising coronavirus cases.
Algeria’s energy minister said OPEC+ – grouping OPEC and allies including Russia – could extend production cuts of 7.7 million barrels per day (bpd) into 2021, or deepen them further if needed.
The weakening outlook has piled pressure on OPEC+ to hold back from a supply increase of 2 million bpd scheduled for January, with the market now pricing in a delay, analysts said.
“We feel OPEC has no choice but to delay output increases; most likely by three months,” analysts at ANZ Research wrote.
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