Oil Ends up 9% as Covid Vaccine News Spurs Economic Hopes

© Reuters.

By Barani Krishnan

Investing.com - Oil prices jumped 9% for their biggest one-day gain in six months Monday as progress in Covid-19 vaccine trials boosted hopes of economic recovery. President-Elect Joe Biden, however, cautioned that the United States still has some way to go before everyone in the country could be vaccinated.

New York-traded West Texas Intermediate, the leading indicator for U.S. crude, settled up $3.15, or 8.5%, at $40.29 per barrel. It was WTI’s biggest one-day gain since a 13% jump in early May.

London-traded Brent, the global benchmark for crude, finished up $2.95, or 7.5%, at $42.40.

Pfizer (NYSE:PFE) announced on Monday that a COVID-19 vaccine candidate it developed jointly with BioNTech SE (NASDAQ:BNTX) proved more than 90 percent effective in the latest trials. 

The U.S. drug giant also said it expected to produce up to 50 million doses of its vaccine in 2020 and up to 1.3 billion in 2021.

The news drove risk assets higher, sending Wall Street’s Dow up almost 5%, as investors bet on stronger economic activity. Safe-havens such as gold tumbled. Even the Nasdaq technology bellwether underperformed as stay-at-home stocks, including e-commerce giant Amazon (NASDAQ:AMZN) and video-conferencing stock Zoom, which gained from the pandemic, tumbled.

Oil prices had seen mixed trends over the past week as concerns about fuel demand amid a global explosion in Covid-19 cases conflicted with unseasonal declines in U.S. crude stockpiles.

“The vaccine news gave a big boost for the crude demand outlook in the long-term,” said Ed Moya, analyst at OANDA in New York. “But the short-term view is still bleak with distribution being months away and the current spread of the virus suggesting lockdowns will be the theme for the winter.” 

Biden welcomed the progress in the Pfizer trials, but urged Americans to continue donning masks and practicing social distancing, saying it will be months before mass-level vaccination will be available.

“It is important to understand that the battle against COVID-19 is still months away,” the president-elect said in a statement. 

“Even if that is achieved, and some Americans are vaccinated later this year, it will be many more months before there is widespread vaccination in this country. Americans will have to rely on masking, distancing, contact tracing, hand washing, and other measures to keep themselves safe well into next year. Today’s news is great news, but it doesn’t change the fact.”