0240 GMT: Crude oil prices pared back sharp overnight gains in mid-morning trade in Asia Nov. 10 as concerns over weak near-term demand fundamentals weighed on the rally spurred by the announcement of progress in the development of a vaccine.
At 10.40 am Singapore time (0240 GMT), ICE Brent January crude futures were down 46 cents/b (1.08%) from the Nov. 9 settle at $41.94/b, while the NYMEX December light sweet crude contract was down 55 cents/b (1.37%) at $39.74/b.
The markers had surged 7.48% and 8.48% Nov. 9 after Pfizer and BioNTech announced their COVID-19 vaccine had proven more than 90% effective in a phase 3 trial, but subsequently lost steam as more immediate concerns over the progression of the pandemic took precedence.
This came after New York City mayor Bill DeBlasio DeBlasio warned the city was "dangerously close" to second wave of the pandemic that could prompt another lockdown and shutter some parts of the economy, and New Jersey Governor Phil Murphy imposed light restrictions in the state and warned they could be tightened if the outbreak worsened, local media reported.
With many countries in Europe already under lockdowns of varying severity, the prospect of renewed restrictions in the US weighed on the market, with analysts noting that Pfizer and BioNTech's vaccine was still months away from commercial production and widespread distribution.
"Unquestionably the vaccine will be a game-changer for the oil complex. However, the pandemic still matters most for near-term concerns," AXI chief global market strategist Stephen Innes said in a Nov. 10 note. "As lockdowns in Europe accelerate and localized outbreaks in the US [become more severe], the oil market's top-side ambitions will be held in check; it will likely take six months for many of us to receive the vaccine," he added.
Meanwhile, indications of OPEC+ intervention continued to spur optimism, with Saudi energy minister Prince Abdulaziz bin Salman saying Nov. 9 at the ADIPEC virtual conference that the alliance may "tweak" its current supply agreement "beyond what the so-called analysts are talking about," depending on how circumstances evolve.
Analysts generally expect the OPEC+ alliance to maintain its current production cuts into 2021 instead of easing them by almost 2 million b/d as originally planned, but OPEC+ delegates have told S&P Global Platts that the cuts could even be deepened.
However, unanimous agreement by all OPEC+ members would be required for any change to be ratified.
"We have the ability to tweak if we have to tweak, but we have to all be convinced that that tweak is required," UAE energy minister Suhail al-Mazrouei said.
