OIL FUTURES: Crude settles higher as COVID-19 vaccine boosts outlooks

Crude oil prices settled at multimonth highs Nov. 23 as demand outlooks improved amid reports of progress on a third COVID-19 vaccine.

NYMEX January WTI settled 64 cents higher at $43.06/b, and ICE January Brent was up $1.10 at $46.06/b.

Oil prices moved higher overnight after European drug maker AstraZeneca announced its COVID-19 vaccine was 70% effective in late-stage trials. The news comes on the heels of the Pfizer and BioTech submitting a request Nov. 20 for Emergency Use Authorization of their COVID-19 vaccine to the US Food and Drug Administration. Those companies announced earlier in November their vaccine was more than 90% effective in late-stage trials.

"This is the third Monday in a row with positive vaccine news," OANDA senior market analysts Edward Moya said. "That's pretty much driving the trade."

Front-month WTI settled at the highest since Aug. 26, while front-month Brent futures were last higher March 5.

Missile attack

Brent futures saw additional upward pressure following an overnight missile attack on a Saudi Aramco distribution station north of Jeddah that caused a fuel tank to catch fire.

Yemen's Iran-backed Houthi rebels claimed responsibility for the attack, in a statement made by the militia's spokesperson on Twitter. Houthi general Yahya Sarea announced the distribution station was targeted with a Quds-2 missile.

The Jeddah incident follows an attempted attack Nov. 11, when Houthis directed two unmanned boats carrying explosives toward Aramco facilities in Jazan on the Red Sea.

Front-month Brent settled at a 2 cent/b premium compared with the second-month contract, flipping the front end of the forward curve to backwardation for the first time since June 26.

NYMEX December RBOB settled 2.88 cents higher Nov. 23 at $1.2040/gal, and December ULSD was up 2.42 cents at $1.3105/gal.

US PMI climbs

The IHS Markit US manufacturing PMI climbed to 56.7 for November, up from 53.4 in October and beating market expectations of a modest pullback in the index. The increase suggests that US economic recovery is extending into the fourth quarter even as rising COVID-19 cases force state and local governments to impose increasingly restrictive lockdown measures.

Still, gasoline cracks continued to weaken. The ICE New York Harbor RBOB crack against Brent fell to around $4.27/ in afternoon trading, on pace for the lowest close since early August.