Crude oil futures rise on vaccine momentum despite near-term pandemic concerns

0325 GMT: Crude oil futures ticked higher during mid-morning Asian trade Nov. 17 as reports of a highly effective Moderna vaccine carried the markets despite rising concerns over the number of COVID-19 infections and increased lockdown measures.

At 11:25 am Singapore time (0325 GMT), ICE Brent January crude futures were up 30 cents/b (0.68%) from the Nov. 16 settle to $44.12/b, while the NYMEX December light sweet crude contract was up 24 cents/b (0.58%) at $41.58/b.

Both ICE Brent January crude futures and WTI futures had jumped 2.43% and 3.02% on Nov. 16 to settle at $43.82/b and $41.34/b, respectively, as the market was lifted by a confluence of bullish developments, including the ratification of the Regional Comprehensive Economic Partnership, indications that the incoming Biden administration is reluctant to impose nationwide lockdowns and reports of a Moderna vaccine found to be almost 95% effective in preliminary trials.

Optimism over the Moderna vaccine continued to lift sentiment in early Asian trade, with ANZ analysts highlighting in a Nov. 17 note that it is likely to be easier to distribute than the Pfizer and BioNTech vaccine due to its long shelf-life and stability at refrigeration temperatures for up to 30 days.

Vandana Hari, chief executive officer of Vanda Insights, agreed in a discussion with S&P Global Platts on Nov. 17, saying: "The momentum from the preliminary success of the Moderna vaccine is carrying crude this morning", but added that sentiment was also supported by indications from the Joint Technical Committee meeting held on Nov. 16 that most members of the OPEC+ alliance are amenable to an extension of the current production cuts.

"The market is waiting for definitive statements from the Saudi or Russian energy ministers during the Nov. 17 Joint Ministerial Monitoring Committee meeting, but for the time being, an extension in output cuts is almost baked into the oil prices," Hari said.

Hari, however, added that given the recent price rally, it seems less likely that OPEC+ may deepen the production cuts, as was initially insinuated by Saudi energy minister Prince Abdulaziz bin Salman during the ADIPEC virtual conference on Nov. 9.

"It remains to be seen for exactly how long the alliance will extend the production cuts for, but it seems that it will steer clear of the option to deepen the cuts," Hari said.

Meanwhile, concerns over the near term development of the pandemic remained, with Austria entering into a nationwide lockdown Nov. 17 and other European countries mulling tighter restrictions amid burgeoning infection numbers.

ANZ analysts said: "[The lockdown restrictions are] weighing on demand for gasoline and distillate, which has had a close correlation with falling mobility data, presenting a difficult backdrop for the OPEC+ alliance."