Daily Energy Research

Coronavirus lockdowns sent Oil prices to record lows in April as the reduction in global trade saw demand for oil wane. As US regulators voted to approve the Pfizer-BioNTech vaccine on Friday and advisers to the Centres for Disease Control and Prevention voted to recommend its use, clearing one of the final hurdles before mass vaccinations can start being distributed across the country with hospitals awaiting their arrival. In Europe, despite Germany going back into a hard lockdown the first vaccines may be approved by the end of the year.

Hopes for mass vaccination has lifted oil prices this month as optimism for a pick up in demand next year maintains bullish sentiment. However, a threat the price rally could be the tapering of the supply cuts initiated by OPEC+ in April. For now, Saudi Arabia has sought to extend the current level of cuts, at 7.7m b/d for a further three months as a preventive measure. But Russia pushed to stick with the plan to ease cuts from January. "Will Iraq and Nigeria seek to get their barrels on to a market that has been boosted by vaccine optimism?" Says Helima Croft at RBC Capital Markets.

Vaccine breakthroughs are in centre stage. In the face of political uncertainty, rising equity valuations as well as rising coronavirus cases, sentiment across the commodity complex is bullish as investors look towards a brighter 2021.

Technically, $46.50 held as support on Friday while the stochastic moved into oversold territory. If the bullish bias continues, $47.30 followed by $47.75 are key resistance on the upside.