Oil prices rose on Friday and notched up a third consecutive weekly rise, buoyed by successful COVID-19 vaccine trials, while traders ignored the spread infection numbers in the US, Europe, and parts of Asia and renewed lockdowns in several countries to limit the spread of the coronavirus.
The market also focused on hopes that OPEC and its allies might delay a further reduction in its production cap at a meeting next weekend.
In Europe, Brent crude futures rose 76 cents, or 1.7%, to settle at $US44.96 a barrel while in New York, West Texas Intermediate (WTI) January crude contract added 52 cents, or 1.2%, to settle at $US42.42 a barrel. The WTI contract for December, which expired on Friday, rose 41 cents, or 1%, to settle at $US42.15 a barrel.
Both crude benchmarks were up around 5% each over the week.
But those oversupply concerns remained in the background as Libya has raised production to pre-blockade levels of 1.25 million BPD and more signs of weakening demand in the US and Europe saw concerns grow about an overhang of crude running into early 2021.
The spread of COVID-19 in a new wave through US oil production areas (such as the Dakotas) saw the first fall in active US oil rig use in 10 weeks last week.
Baker Hughes Co said total active rig numbers fell by two to 310, with oil rigs alone dropping by five to 231, after hitting their highest since May last week.
While news about effective COVID-19 vaccines boosted trader confidence last week, the reality is that it will take months if not more than a year for the vaccines to show any impact on COVID-19 infections.
The big immediate concern is the Thanksgiving holiday and retail sales season up to Christmas. It is vital for US families, airlines, cruise ships, oil companies, car companies, and especially retailers.
Around 50 million people might travel this week, but no one quite knows with infections and lockdowns closing more and more cities.
Also hopes in the market was that OPEC, Russia, and other producers will keep crude output in check. The group, known as OPEC+, were expected to delay a planned production increase from January 1.