Oil prices jumped about 10 percent during trading yesterday, which is the largest single-day gain in more than six months after Pfizer announced promising results for its candidate vaccine to prevent Covid-19 disease, and Saudi Arabia said that "the special OPEC + agreement" With oil production, it can be adjusted to balance the market.
According to "Reuters", Brent crude contracts rose $ 3.63, or 9.25 percent, to $ 43.10 a barrel at 14:50 GMT, while US West Texas Intermediate crude rose $ 3.89, or 10.5 percent, to $ 41.02.
"In the eyes of dealers, finding a vaccine will help ensure that there is no need to impose general isolation measures in the future and people will take to the streets again, allowing land and air transport to recover," said Bjornar Tunhajen, head of oil markets at Rystad Energy.
Meanwhile, Giovanni Stonovu, an analyst at UBS, said that oil prices also found support from the weakening of the dollar resulting from Joe Biden's election victory.
The price gains also support the efforts of OPEC + to contain the oversupply in the market through continuous improvement in the level of compliance with production cuts, especially in light of expectations of extending the wide production cuts during the next year, while continuing to urge failed producers to adhere to the supply reduction plan.
He told Al-Eqtisadiah, international specialists and analysts, that the OPEC + ministers have a proactive vision of market developments and are well guarded against all negative factors pressing on prices by reducing their impact, in an effort to permanently approach the balance of supply and demand. An agreement to cut oil means postponing the group’s plans to increase production in January.
The specialists pointed to the ongoing understandings between Saudi Arabia, the Emirates and Russia to reach the best mechanisms for dealing with changes in the market, especially the current worsening crisis related to the occurrence of a second wave of closures due to the Coronavirus, which threatens a sharp contraction in demand.
The specialists explained that the demand in the Asian markets is in a better position, which relatively maintains the cohesion of prices, explaining that everyone is looking forward to the reduction of concerns about the oversupply, especially in light of the presence of many positive indicators from China, including that the country's oil imports are on the way to a 10 Percent this year.
The specialists pointed out that the prospective promotion of Alexander Novak, the Russian Energy Minister to the position of Deputy Prime Minister, will support his role as a negotiator for the "OPEC +" alliance among the oil-producing countries and facilitate the continuation of communication, understanding, and partnership with Saudi Arabia.
Robert Stehrer, Director of the Vienna International Institute for Economic Studies, said, "Saudi Arabia is always proactive and has a good future vision, as reflected in the statements of Prince Abdulaziz bin Salman, the Minister of Energy, of not objecting to amending the current agreement according to future needs."
He stated that "OPEC +", led by Saudi Arabia and Russia, was planning to ease the restrictions on reducing production, which amounted to 7.7 million barrels per day, by adding about two million barrels at the beginning of the year. And to complete the prior consultations and preparatory studies so that the features of the amendments that the market awaits take shape.
For his part, Alexander Bogle, a consultant to GBC Energy International, explained that the victory of President-elect Joe Biden gave a dose of optimism to the markets and increased the risk appetite of investors, which contributed to the equation of some unbridled negative impact resulting from the second wave of the epidemic that weakened demand. Broadly, indicating that this week began with good gains that were absent from the market over the past weeks.
He pointed out that prolonging the production cuts at the OPEC + ministers meeting is an expected and expected step, especially since many countries support them, led by Saudi Arabia, Russia, and Algeria, where the latter takes over the task of the rotating presidency of OPEC, and everyone is aware of the size of the challenges the market faces in The current period and that extending the cuts has become the only option in light of the severe weak demand due to the pandemic.
For his part, Lucas Berthreher, analyst at OMV, the Austrian oil and gas company, said that the crude oil market is in good mood and sentiment, which led to strong price gains at the beginning of the week, in light of the US President-elect Joe Biden's readiness to move home. The white paper that many are betting on in fixing previous mistakes and giving a strong impetus to economic growth, after the pandemic destroyed growth expectations and the recovery of demand, and fears about the US energy sector have receded from the policies of Biden, who pledged a gradual shift towards clean energy resources, which is a global approach.
He pointed out that getting the US economy affected by the epidemic out of the crisis is the biggest challenge facing Biden, who hastened to form a working group on the epidemic before taking over the reins of power, indicating that the election of the new president may speed up fiscal stimulus policies and reduce sharp differences and previous economic conflicts with China and others.
In turn, Nila Hengstler, Director of the Middle East Department at the Austrian Federal Chamber, explained that optimism about the outcome of the American elections has overshadowed many negative factors that still dominate the market, including the renewed expansion of Libyan supplies, as production exceeded one million barrels per day during the weekend of last weekend, what is the depth of the difficulties and challenges Facing the "OPEC +" alliance while they are on the cusp of a decisive and articulation meeting at the end of this month to discuss production policy and determine the level of production cuts next year.
She mentioned that the current state of optimism may not withstand much pressure from downward factors on prices due to the continued weakness of demand and continuing speculation activities on falling prices due to the extensive damage to consumption, especially in Europe due to the spread of the epidemic and the return of the comprehensive closure, but hopes remain surrounding Asian demand while it is in a situation. Better, in addition to the hopes for an acceleration of stockpile withdrawals, albeit relatively in the coming period.
On the other hand, the "OPEC" basket of crude fell to $ 39.22 a barrel last Friday, compared to $ 39.79 a barrel the day before.
The daily report of the Organization of Petroleum Exporting Countries "OPEC" said yesterday, "The price of the basket, which includes the average prices of 13 crudes produced by the member states of the Organization, achieved the first decline after several previous highs, and the basket gained about three dollars compared to the same day last week. Which recorded $ 36.50 a barrel.