- The ASX-listed Papua New Guinean (PNG) company Oil Search Limited stocks jumped by 14% on the back of positive market developments.
- The oil industry joined the bullish run of the stock market after the optimistic news of Pfizer’s experimental vaccine proving 90% effective against the COVID-19.
- Brent crude jumped by 7.5%and crossed US$40 mark settled on US$42.56 per barrel. WTI benchmark settled on US$40.29, up by US$3.15 or 8.5% on 09 November 2020.
The ASX-listed Papua New Guinean (PNG) company Oil Search Limited (ASX:OSH) stocks jumped by 14% to A$3.25 around 12:00 AEST on 9 November 2020. The company is involved in crude oil and LNG production.
The uptick was witnessed across the oil space with Crude Oil December contract soaring more than 8% on 09 November 2020, one of the highest one-day rally in the last six months.
Brent crude December contract moved up by US$3.11, or 7.5%, to US$42.56 per barrel. The US benchmark crude- West Texas Intermediate (WTI) crude moved up $3.15, or 8.5%, to US$40.29 on 09 November 2020.
The overall market turned optimistic after the announcement of 90% efficacy of COVID-19 vaccine which was developed by pharmaceutical giant Pfizer.
Pfizer and BioNtech were working on developing a potential COVID-19 vaccine candidate based on the mRNA-BNT162be. The vaccine candidate is currently in phase-3 trials and has shown 90% success in preventing the spread of the deadly virus infection.
Pfizer and BioNtech are racing hard to complete all the required safety checks and regulations. They are planning to file Emergency Use Authorization to the USA regulators- Food and Drug Administration (FDA) during the 3rd week of November.
Other factors driving the oil rally
OPEC+ planning to tweak production further
Saudi Arabia Energy Minister Abdulaziz bin Salman has hinted that OPEC+ could change the oil production cut cooperation agreement if the member countries agree to do so. The minister assured that the OPEC+ is capable of cutting the production by 7.7 million barrels per day from the current level of 5.7 million barrels per day.
The statement from the Kingdom’s Energy minister provided relief to the oversupplied oil market after the news of production hike by Libya. There have been reports which stated that Libya had increased production by 1 million barrels per day.
Joe Biden’s positive agenda to boost US oil market
The US President-elect Joe Biden has announced in his election rallies that he is not going to ban the technology (fracking) which has made the US self-reliant in energy. So, dip in oil production is not expected in recent future.
Biden has also said that he is going to improve relations with Iran and Venezuela. Venezuela has the largest reserve of crude oil in the world but is not able to tap the market due to restriction placed by the United States.
Iran, with its vast reserve of oil and natural gas, could not trade the commodities in high volume due to the ban on trade. If Biden is successful in improving relationships with these two countries, there will be more oil in the market. With the current demand level, more oil in the market could further push oil to a new low.