Oil prices continued to surge today as the discovery of an effective vaccine for the coronavirus disease buoyed traders.
Both Brent crude and West Texas Intermediate rose around 3.5 per cent this morning, continuing a rally which has seen prices rise over 10 per cent since Monday.
Global standard Brent crude is now trading around $45, back at the levels seen after easing restrictions over the summer.
Likewise, the American benchmark WTI pared the losses of the last two months to challenge the $43 mark.
The rally comes just weeks after prices dropped ominously as large parts of the world brought in new lockdown restrictions amid a surge of new infections.
But Monday’s announcement from pharma giant Pfizer has raised hopes that the return to something approaching normality could be far swifter than previously hoped.
Bjornar Tonhaugen of Rystad Energy said that the news had seen widespread “euphoria” in the oil market.
But he warned that the price was “not justified” given the market fundamentals.
“In our view, oil prices are enjoying the last leg of a vaccine-rally which may fade out soon, as fundamental realities start to sink in”, he said.
“In the current environment, with oil demand on the red against supply, such price levels are not justified for the short-term.”
He said that oil producer cartel Opec+ would have to “refrain” from increasing production on 1 January in order for prices to remain at this level.
The group will meet next week, with de factor leader Saudi Arabia and Russia having both indicated that a delay to the 2m production raise was a possibility.
Prices were also helped by forecasts of a larger than expected decline in US crude stockpiles for a second straight week.