Oil jumped by almost 10 percent on Monday for its biggest daily gain in almost six months after news of a highly effective Pfizer vaccine against COVID-19 and Saudi Arabia’s assurance that an OPEC+ oil output deal could be adjusted to balance the market.
Key members of the Organization of the Petroleum Exporting Countries (OPEC) are wary of US President-elect Joe Biden relaxing measures on Iran and Venezuela, which could mean an increase in oil production that would make it harder to balance supply with demand.
Oil prices also found support from a weaker US dollar on the back of Biden’s US election victory, said UBS oil analyst Giovanni Staunovo.
The dollar weakened on Monday, hitting a 10-week low and boosting dollar-priced commodities that become more affordable for buyers outside the United States.
China, the world’s top crude importer, reported October imports down 12 percent from September.
However, renewed European lockdown measures to contain rising COVID-19 cases still appear set to push the outlook for global oil demand toward the downside, an International Energy Agency (IEA) official said.
“Major parts of the European continent are in lockdown. This would surely work toward the negative side,” said Keisuke Sadamori, IEA director for energy markets and security.