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Oil Up Over U.S. Vaccine Approval and Hopes for Fuel Demand Recovery

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By Gina Lee

Investing.com – Oil was up on Monday morning in Asia, with the U.S. approval of a COVID-19 vaccine and the extension of Brexit talks between the U.K. and the European Union (EU) easing global fuel demand jitters.

Brent oil futures rose 0.36% to $50.15 by 11:34 PM ET (3:34 AM GMT) and WTI futures gained 0.34% to $46.73. Brent futures remained above the $50 mark, with oil l prices having rallied for six consecutive weeks, the longest stretch of gains since June.

The U.S. Food and Drug Administration (FDA) granted emergency use authorization to BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE:PFE) and BioNTech SE (F:22UAy) SE on Dec. 11. The approval will see the first U.S. deliveries of BNT162b2 later in the day, and lifted hopes that the world’s largest oil consumer will see a decrease in the number of COVID-19 cases, lift restrictions and increase demand.

However, some investors struck a cautious note amid the optimism.

“Having ‘bought the rumour’ of an effective vaccine, now that delivery is here will investors ‘sell the fact’?” CMC Markets’ chief markets strategist Michael McCarthy told Reuters.

The U.K. and the European Union said that post-Brexit trade deal talks would continue, after the initially set deadline of Sunday came and went.

With the number of global COVID-19 cases passing 72.1 million as of Dec. 14, according to data from Johns Hopkins University, McCarthy’s caution might be well placed. Germany, for example, announced the implementation of stricter restrictions beginning on Wednesday.

Organization of the Petroleum Exporting Countries and its allies (OPEC+) will be holding its joint ministerial monitoring committee meeting, monitoring compliance among members, on Dec. 16. The cartel will also meet on Jan 4 to gauge fuel demand after deciding to limit production rises to 500,000 barrels per day starting in 2021 earlier in the month.

However, production in the U.S. is ramping up, with energy firms adding the most oil and natural gas rigs in a week since January during the past week. Meanwhile, there were two separate fires at Qua Iboe crude oil export terminal in Nigeria, and one at an oil pipeline in Iran, on Sunday.

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