Oil prices soared on Tuesday morning to their highest level since early March after another pharmaceutical alliance announced a high level of protection of a vaccine candidate and after U.S. President Donald Trump allowed the transition to Joe Biden's administration to begin.
As of 10:35 a.m. ET on Tuesday, WTI Crude was surging by 4.11 percent at $44.80, closing in to the $45 a barrel mark, while Brent Crude was up 3.34 percent at $47.60.
The last time WTI Crude traded at $45 per barrel was eight months ago, in early March this year, just before Saudi Arabia and Russia disagreed on how to manage oil supply in the pandemic and started a brief oil price war that contributed to the price collapse together with the demand destruction.
On Monday, the University of Oxford and AstraZeneca said that interim trial data from their Phase III trials show their candidate vaccine is effective at preventing COVID-19 and offers a high level of protection.
This was the third positive vaccine news for the past three weeks, after the announcements from Pfizer and Moderna, and pushed oil prices further up as the market began to hope that a vaccine rollout soon could help global oil demand to recover sooner than expected.
Since the first announcement from Pfizer, the energy sector has been one of the biggest winners on the market, having been the worst hit when demand initially crashed in the pandemic, John Hardy, Head of FX Strategy at Saxo Bank, said on Tuesday. Related: Why Iraq Isn't Producing 10 Million Barrels Per Day Yet
"While crude oil, up 15% since November 9, still requires support from producers curbing production, company stocks and related ETF's have surged higher," Hardy said.
In another bullish news for oil, the prompt Brent spread has moved to backwardation-the state of the market signaling deficit-ING strategists Warren Patterson and Wenyu Yao said.
"OPEC+ will obviously be very happy to see the forward curve tightening, however we still believe there is a risk around the market rallying too much too soon," they said.
OPEC+ meets early next week to decide whether to roll over the current cuts through the first quarter of 2021-an outcome that the market has already priced in.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More