Oil prices spike as coronavirus vaccine shows promise

US demand for petroleum products has slowly rebounded as lockdowns aimed at containing the spread of the coronavirus have eased

Oil prices soared Monday and were on track for their strongest gain since May amid signs of progress on a COVID-19 vaccine.

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Pfizer and BioNtech said their experimental vaccine candidate showed greater than 90% effectiveness from preventing COVID-19 in participants without evidence of prior infection.

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West Texas Intermediate crude oil, the U.S. benchmark, jumped $3.88 to $41.02 per barrel and Brent crude oil, the international standard, was up $3.73 at $43.18 per barrel.

“Oil prices are reflecting the expectation that demand will increase with the successful vaccine as people take to the roads and to the air and demand begins to return,” Andrew Lipow, president of the Houston-based consulting firm Lipow Oil Associates, told FOX Business.

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U.S. demand for petroleum products has slowly rebounded as lockdowns aimed at containing the spread of the disease have eased, but remained off 11%, 1.3 million barrels per day versus this time last year. The shortfall is led by a significant decline in jet fuel demand as passengers remain wary of air travel amid the pandemic.

Overall, U.S. demand had fallen by as much as 28%, or 5.6 million bpd, in April as stay-at-home orders issued to slow the spread of COVID-19 eliminated non-essential travel. Global demand, meanwhile, was reduced by up to 25 million to 30 million bpd.

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The sharp drop in demand caused oil inventories to swell toward their limits, resulting in West Texas Intermediate crashing below zero for the first time. WTI settled at -$36.73 per barrel on April 20.

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