Oil settles higher boosted by latest COVID-19 vaccine progress

FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant/File Photo

NEW YORK (Reuters) - Oil prices settled up more than 2% on Monday after trading higher earlier in the day as Moderna Inc MRNA.O said its experimental vaccine was 94.5% effective in preventing COVID-19.

Brent crude futures for January LCOc1 settled up 1.04, or 2.43%, at $43.82 a barrel, after earlier rising more than 4%. U.S. West Texas Intermediate crude for December CLc1 was up $1.21, or 3%, at $41.34.

“There was a little bit of excess buying pressure, which pushed us ahead of where the fundamentals supported us, so we only partially held the gains,” said Gary Cunningham, director of market research at Tradition Energy in Stamford. “We have an overhanging concern over global demand as COVID-19 outbreaks continue around the world.”

The announcement by Moderna comes after Pfizer Inc PFE.N reported last week that its vaccine was more than 90% effective, raising hopes that pandemic-driven damage to the global economy could be reduced.

Prices were also buoyed by data showing a rebound in China and Japan, with figures showing that Chinese refineries processed record daily levels of crude in October.

Both WTI and Brent gained more than 8% last week on hopes of a vaccine and expectation that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, would maintain lower output next year to support prices.

The group, known as OPEC+, has been cutting production by about 7.7 million barrels a day (bpd), with compliance seen at 96% in October, and had planned to increase output by 2 million bpd from January.

OPEC+ is set to hold a ministerial committee meeting on Tuesday that could recommend changes to production quotas when all the ministers meet on Nov. 30 and Dec. 1.

“There is no denying that the oil market is fully in the hands of OPEC+,” said SEB chief commodity analyst Bjarne Schieldrop. “The organisation is the only reason why oil prices today are not $20 a barrel. As such, their upcoming meeting on Nov 30-Dec 1 is no less hugely important.”

Additional reporting by Florence Tan and Roslan Khasawneh and Noah Browning; Editing by Jane Merriman, David Goodman and Cynthia Osterman