London — Oil prices rose on Tuesday as hopes that a COVID-19 vaccine could be on the horizon outweighed the expected negative impact on fuel demand from new lockdowns to contain the virus.
Brent crude futures rose 53 cents, or 1.3%, to $42.93 by 1435 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 futures gained 54 cents, or 1.3%, to $40.83.
Both contracts jumped 8% on Monday in their biggest daily gains in more than five months after drugmakers Pfizer and BioNTech said that their experimental COVID-19 treatment was more than 90% effective based on initial trial results.
Mass rollouts, however, are likely to be months away and subject to regulatory approvals.
“A viable vaccine is unequivocally game-changing for oil – a market where half of demand comes from moving people and things around,” JP Morgan said in a note.
Prices were also boosted by comments from Saudi Arabia’s energy minister, who on Monday said that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, could tweak their supply pact if demand slumps before the vaccine is available.
OPEC+ agreed to cut supply by 7.7 million barrels per day (bpd) from August through December and then ease the cuts by about 2 million bpd in January.