Oil prices extend gains on Covid-19 vaccine hopes

On Friday, both USA and Brent crude oil futures scheduled to be expired on December 21 reported a robust rise of 1 per cent to wrap up the third straight week of gains, mostly buoyed up over hopes of a couple of successful pandemic vaccine trials which in effect had been helping investors downplay the fiscal consequences of a second wave of pandemic outbreak alongside frets of a deluge of demand crunch across the globe.

Both benchmarks jumped 5 percent last week on the likelihood of the Pfizer and Moderna vaccines beginning deployment before year-end, and US healthcare workers and other front line workers could start getting shots within a day or two of regulatory consent next month, said Dr. Moncef Slaoui, chief scientific adviser for "Operation Warp Speed".

At the same time, Barclays sees the West Texas Intermediary (WTI) crude at US$50 per barrel in 2021.

Both the Brent and the WTI benchmarks gained 5% last week.

The oil markets have trimmed their weekly gains "as virus surge throws a wet blanket over vaccine optimism", said Stephen Innes, chief global market strategist at Axi.

"But it is all down to OPEC".

An OPEC+ ministerial committee held a meeting earlier in the week created to look at adjusting plans for oil supply cuts next year as the coronavirus pandemic continues to drive down demand.

On the supply side, OPEC+, which meets on November 30 and December 1., will look at options to extend its deal on output cuts by at least three months from January.

While news about effective COVID-19 vaccines boosted trader confidence last week, the reality is that it will take months if not more than a year for the vaccines to show any impact on COVID-19 infections.

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"Any stimulus deal done before the holidays will help keep crude prices stay near the upper boundaries of its recent trading range", said Edward Moya, senior market analyst at OANDA.