Crude oil futures extend uptrend on vaccine reports, US political developments

Singapore — 0251 GMT: Crude oil futures rose during the mid-morning trade in Asia Nov. 24, extending overnight gains, as the market remained supported by the progress of a third potential COVID-19 vaccine and co-operation from US President Donald Trump in moving President-elect Joe Biden's transition forward.

At 10:51 am Singapore time (0251 GMT), ICE Brent January crude futures were up 35 cents/b (0.76%) from the Nov. 23 settle at $46.41/b, while the NYMEX January light sweet crude contract was 37 cent/b (0.86%) higher at $43.43/b.

The contracts had risen 2.45% and 1.51% respectively on Nov. 23 on reports that a Oxford-AstraZeneca vaccine had an average efficacy of 70%, with analysts noting it was cheaper to produce and distribute than two other vaccines that have also released promising results in recent days.

"With the earlier Pfizer and BioNtech and the Moderna vaccine announcements, and the recent AstraZeneca and Oxford vaccine announcement, we can see the end [of the pandemic] in sight," OANDA senior market analyst Jeffrey Halley told S&P Global Platts Nov. 24.

Stephen Innes, chief global market strategist at Axi, echoed the same sentiment, saying in a Nov. 24 note: "Oil markets are rightly jumping for joy as the AstraZeneca delivery is a big deal, as most of the developed world will be able to immunize its most at-risk population to COVID by the spring and likely the entire community by mid-year."

Meanwhile, uncertainty in the US political arena eased after Government Services Administration chief Emily Murphy gave the approval to begin the formal transition process to a Biden presidency, with Trump also expressing his amenability to following "the initial protocols" in a tweet.

Halley noted that this portended well for the oil market as "it looks like Trump has conceded the election unofficially, paving the way for the Biden administration, which is perceived to be much more trade friendly. Biden also plans to nominate Janet Yellen as Treasury secretary, and this news has been positive for oil and the broader risk assets.

"Greater international trade equals greater growth and greater growth equals more oil consumption, which means higher prices. That is the simple equation that we are going to see in Asia today," Halley added.