Oil set for third week of gains on vaccine hopes

NEW YORK: Oil prices edged higher on Friday, on track for a third consecutive weekly rise, buoyed by successful COVID-19 vaccine trials, while renewed lockdowns in several countries to limit the spread of the coronavirus capped gains.

Brent crude futures rose 46 cents to $44.66 a barrel by 1:28 p.m. EST (1828 GMT).

The more active US West Texas Intermediate (WTI) January crude contract gained 28 cents to $42.18 a barrel. The WTI contract for December, which expires on Friday, was up 28 cents to $42.02 a barrel.

Both benchmarks are up more than 4% so far this week.

Prospects for effective COVID-19 vaccines have bolstered oil markets this week. Pfizer Inc said it will apply to US health regulators on Friday for emergency use authoritization of its vaccine, the first such application in a major step toward providing protection against the new coronavirus.

"Despite the fact that in reality it will take time for a global vaccine campaign to be implemented, time during which oil demand will suffer, positive news are breaking daily about the vaccine deliveries," said Bjornar Tonhaugen, Rystad Energy's head of oil markets.

Also boosting sentiment was hope that the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers will keep crude output in check. The group, known as OPEC+, were expected to delay a planned production increase.

OPEC+, which meets on Nov. 30 and Dec. 1, is looking at options to delay by at least three months from January the tapering of their 7.7 million barrel per day (bpd) cuts by around 2 million bpd.

"An assumed roll-over of current cuts by OPEC+ to Q1 2021 is probably in today's price of $44 per barrel," Nordic bank SEB said.

Still, smaller Russian oil companies are planning to pump more crude this year despite the output deal as they have little leeway in managing the production of start-up fields, a group representing the producers said.

Oil prices were getting some support from signs of movement on a stimulus deal in Washington after US Senate Republican Majority Leader Mitch McConnell agreed to resume discussions on providing more COVID-19 relief as cases surge across the United States.

Oversupply concerns, however, continue to weigh as Libya has raised production to pre-blockade levels of 1.25 million bpd.

US energy firms cut the number of oil and natural gas rigs operating for the first time in 10 weeks, according to data on Friday from energy services firm Baker Hughes Co. The US oil and gas rig count, an early indicator of future output, fell by two to 310 in the week to Nov. 20.