Oil Tests The $42 Level On Vaccine NewsOil gained strong upside momentum and made an attempt to settle above $42.
Oil Video 16.11.20.
Oil Moves Higher On Hopes That COVID-19 Vaccines Will Ultimately Bring Oil Demand Back To Normal
Today, oil got a major boost after Moderna reported that its COVID-19 vaccine was 94.5% effective. This is not surprising since the oil market is heavily reliant on demand for transportation which will remain under pressure until the world manages to contain the spread of the virus.
75% of retail CFD investors lose money
All vaccines that have shared data from large-scale trials have so far demonstrated efficiency of 90% or more. While the world will face many challenges in an attempt to get the vaccine to as many people as possible, there’s light at the end of the tunnel.
Obviously, the recent news are bullish for oil in the longer-term. At the same time, it remains to be seen whether oil traders will be ready to push oil closer to the recent highs at the $43 level as current demand remains under pressure due to lockdowns in Europe.
Interestingly, U.S. oil producers continue to increase the number of active oil rigs despite the challenging situation with coronavirus in the country. The latest Baker Hughes Rig Count report indicated that the number of oil rigs increased by 10 to 236.
Ultimately, the constant increase in the number of drilling rigs will lead to an increase in production, which may boost inventories and put some pressure on oil prices.
Libya’s Oil Production Gets Above 1.2 Million Barrels Per Day
Libya has so far outperformed the most optimistic forecasts regarding the speed of the rebound of its oil production. About a week ago, Libya stated that its oil production crossed the 1 million barrels per day (bpd) mark, and recent reports indicate that the country’s oil production has surpassed 1.2 million bpd.
This is a major surprise for most market observers who believed that the damage dealt to infrastructure during the civil war will hurt Libya’s ability to rapidly increase its oil production.
Currently, Libya has no plans to join the OPEC+ deal as the country desperately needs money after months of war. At this point, Libya wants to increase its production to 1.7 million bpd, which represents an increase of about 0.5 million bpd from current levels.
While Libya may find that it’s harder to get these “extra” barrels out of the ground, the oil market is still facing a prospect of 0.5 million bpd of additional production. In the near term, rising exports from Libya will continue to serve as a material negative catalyst for the oil market.
For a look at all of today’s economic events, check out our economic calendar.