Oil rises about 1%, posts third week of gains on vaccine hopes

Oil prices rose about 1% higher on Friday and posted 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 76 cents, or 1.7%, to settle at $44.96 a barrel. The more active U.S. West Texas Intermediate (WTI) January crude contract gained 52 cents, or 1.2% to $42.42 a barrel. The WTI contract for December CLc1, which expired on Friday, rose 41 cents, or 1%, to settle at $42.15 a barrel.

Both benchmarks gained about 5% this week.

Prospects for effective COVID-19 vaccines have bolstered oil markets this week. Pfizer Inc said it will apply to U.S. 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 U.S. 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.

U.S. energy firms this week cut the number of oil and natural gas rigs operating for the first time in 10 weeks, according to energy services firm Baker Hughes Co BKR.N. The oil and gas rig count, an early indicator of future output, fell by two to 310 this week, with oil rigs alone dropping by five to 231, after hitting their highest since May last week.

Money managers raised their net long U.S. crude futures and options positions in the week to Nov. 17 by 3,100 contracts to 277,080, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.