Oil futures rallied Monday, with the U.S. benchmark finishing 3% higher after Moderna Inc. said its vaccine candidate was highly effective in preventing new COVID-19 infections.
Meanwhile, mild weather forecasts and U.S. supplies near record highs pulled natural-gas futures down by 10% Monday.
Moderna MRNA said its vaccine candidate prevented 94.5% of infections in a late-stage trial. The progress comes a week after Pfizer Inc. PFE and BioNTech SE BNTX said their vaccine candidate was more than 90% effective.
“It will still take some time for authorization, production and vaccination of people, so oil demand will not benefit in the very short-term, but it definitely will benefit on the mid and longer term,” said Louise Dickson, oil markets analyst at Rystad Energy, in emailed commentary. Still, “such news are butter on traders’ bread and are moving prices.”
West Texas Intermediate crude for December delivery
the global benchmark, added $1.04, or 2.4%, to finish at $43.82 a barrel on ICE Futures Europe.
“Understandably news of a second vaccine [carries] an upside attraction for oil prices, but oil demand is not at the moment affected on the ground,” said Dickson. “Vaccine news, which are rightly received as positive in the long-term, do not mitigate the risk that the U.S. and other major oil-consuming centers will likely have to return to some form of lockdown in the very short term.
Crude was trading higher ahead of the Moderna announcement, with support tied to upbeat data out of Asia, including a 6.9% rise in October Chinese factory output year over year. Retail sales gained 4.3% over a year ago, up 1 percentage point from the previous month. Investment in factories and other fixed assets rose 1.8% in the first 10 months of 2020, up 1 percentage point from the first nine months.
When judging the economic recovery, “particularly through the lens of oil markets from planes, trains and automobiles actively moving from point A to B, with multiple high efficacy vaccines in the pipeline, there is good chance mobility will absolutely return to pre-pandemic levels,” said Stephen Innes, chief global market strategist at Axi, in a note.
Traders are also awaiting the outcome of a meeting Tuesday of the Joint Ministerial Monitoring Committee that tracks output curbs by the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+.
“The committee may make a recommendation, but we will have to wait until the full OPEC+ meeting” on Nov. 30-Dec. 1 for a final decision, said Warren Patterson, head of commodities strategy at ING, in a note.
“We are still of the view that OPEC+ will need to extend current cuts of 7.7 [million barrels a day] by at least another three months, in order to ensure that the market draws down inventories over the first quarter of next year,” he said.
A separate Joint Technical Committee meeting on Monday to review world oil market conditions pegged OPEC+ compliance with production curbs, including cuts to make up for excess output in the past, was at 96% in October, according to Reuters, which cited an OPEC+ source.
Reuters reported that the meeting ended with most countries supporting a three-month extension of current production curbs.
Natural-gas futures, however, saw their December contract
lose 10% to $2.697 per million British thermal units. That was the largest one-day percentage loss since September, according to Dow Jones Market Data.
“Mild weather forecasts, strong production, and a surprise [U.S.] storage build announced last week,” combined to push prices sharply lower, said Christin Redmond, commodities analyst at Schneider Electric.
U.S. natural gas in storage ended the injection season — the period between April 1 to Oct. 31 when supplies build up ahead of higher demand in the winter season — at 3.920 trillion cubic feet, according to data from the U.S. Energy Information Administration. That level marks a near-record high, the EIA said, adding that the record was at 4.047 trillion cubic feet in mid-November 2016.