Crude oil is one of a plethora of markets breaking higher today, as vaccine optimism and stimulus is helping to boost the commodity and its relevant ETFs.
With precious metals, stocks, bonds, and energy complexes all advancing on Tuesday, crude oil is in good company. Oil prices spiked early on Tuesday, reaching their loftiest level since Saudi Arabia and Russia derailed the OPEC+ agreement in early March, as optimism related to a coronavirus vaccine trial and the European Union establishing a historic stimulus package deal after five days of wide-ranging talks bolstered markets.
West Texas Intermediate crude prices were surging by 3.41 percent at $42.20 earlier in the session but have since fallen back to $41.80 as of 145PM EST. Meanwhile, while Brent Crude prices climbed by 3.28 percent on the day to $44.69.
Both WTI and Brent notched their highest levels since March 6 this year, when the leaders of the OPEC+ pact, Saudi Arabia and Russia, were unable to reach an agreement on how to curb oil supply to a market that had begun to show concerning signals that the pandemic would destroy demand as lockdowns commenced in Italy and throughout Europe.
As many investors recall, there was a brief period in April when oil futures went negative, revealing the extent of short-term imbalances between supply and demand.
Good news arrived on Tuesday however, as crude prices jumped after news Monday that a Phase 1 trial of a vaccine being developed by the University of Oxford revealed that the vaccine raised no safety issues, and did not lead to any unexpected symptoms in the trial’s recipients.
With surging coronavirus cases in many countries, including the United States, and fears that a second COVID-19 wave might result in additional lockdowns, the markets championed the vaccine development news.
Oil prices were also supported by the conclusion of a substantial economic stimulus package that the European Union (EU) leaders finally completed following five days of intense negotiations and disagreements, as the U.S. looks to soon embark on its own discussions.
The next immediate catalyst for oil prices will come from the industry estimates of U.S. commercial oil inventories due to be released by the American Petroleum Institute (API) later on Tuesday.
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