Oil market welcomes COVID-19 vaccine breakthrough with double digit gains

Oil prices rose by the highest since May on the news of the imminent rollout of a COVID-19 vaccine with 90% efficacy, sparking hope that an end is in sight to the worst demand slump in decades.

Early morning trading in New York saw Brent crude rising by 9.02% to US$43.01 per barrel and West Texas Intermediate surging by 10.37% to $40.92 per barrel after Pfizer Inc. and BioNTech SE announced the latest positive findings in a large-scale study.

The widescale availability of a clinically safe vaccine has long been considered the best solution for ending global, national and regional restrictions on large gatherings and travel, which have severely dented oil demand throughout most of this year.

“This changes everything on the demand side,” said Stewart Glickman, energy equity analyst at CFRA Research. “Assuming it can be produced commercially, it makes it very viable for people to take more risks knowing they have a vaccine.”

Oil stocks also jumped following the news, including majors ExxonMobil and Chevron. The US’s biggest producers gained 13% each, but they both remain down by more than a third this year as experts question if the oil industry has had its peak.