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Bloomberg
Oil touched its strongest level since early September as signs that Covid-19 vaccinations in the US could be underway within three weeks improved the demand outlook.
Markets broadly rallied after AstraZeneca Plc became the latest company to report a vaccine that protects most people from coronavirus. Vaccinations will “hopefully†start as soon as December 11 or December 12, Moncef Slaoui, head of the American government’s Operation Warp Speed vaccine acceleration program, said on CNN on Sunday. A weaker dollar also buoyed crude.
The prospect of a treatment has reshaped the oil futures curve, with nearby prices rallying more than later ones. Small pockets of the WTI curve moved into a bullish backwardation structure on Friday, and those gains continued early Monday.
Crude has jumped around 20% in November as pharmaceutical companies made rapid progress on readying anti-virus drugs. Optimism that relief from the pandemic is in sight has seen the market look past surging infections and more lockdown measures. The US is now averaging almost 110,000 more daily cases than a month ago, while the opening of a Hong Kong-Singapore travel bubble has been delayed by two weeks due to an uptick in cases in the Chinese territory.
“Positive risk sentiment and a weaker dollar are supporting oil,†said UBS analyst Giovanni Staunovo.
The rapid firming of the oil futures curve is a sign that the market expects a rapid tightening of supplies ahead, RBC analysts including Michael Tran and Helima Croft wrote in a report. The move higher has been one of the largest in recent years, they said.