Oil costs rise on vaccine hopes, tanker explosion in Saudi Arabia

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© Reuters. FILE PHOTO: An oil tanker passes under the Golden Gate Bridge during a rain in San Francisco

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By Florence Tan

SINGAPORE (Reuters) – Oil prices soared Monday, pushing Brent back above $ 50 a barrel on hopes that coronavirus vaccine rollouts will boost global fuel demand amid a tanker explosion in Saudi Arabia messed up.

The futures for February rose 67 cents, or 1.3%, to $ 50.64 a barrel by 0730 GMT, while the crude oil futures for US West Texas Intermediate rose 62 cents, or 1.3%, to $ 47.19 a barrel in January Barrels rose.

Prices also increased profits amid fluctuations in supply after a shipping company said an oil tanker was hit by an outside source while unloading at the port of Jeddah in Saudi Arabia.

"The market is evaluating the supply disruptions due to these incidents versus Iranian recurring (supply) volumes," said Virendra Chauhan, an analyst at Energy Aspects, adding that the widespread spread of the virus in the west has weighed on demand. "So it's not surprising that prices are restless."

Brent and WTI have rallied for six straight weeks, their longest profit margin since June.

The United States launched its vaccination campaign against COVID-19 in the hope that pandemic restrictions could end soon and demand from the world's largest oil consumer could increase.

An extension of the Brexit talks between the European powers also spurred the financial markets on Monday.

CMC Markets Chief Marketing Strategist Michael McCarthy asked, "After investors buy the rumor of an effective vaccine, will investors sell the fact after it's shipped?"

Major European countries remained in lockdown mode to contain the spread of COVID-19, which has reduced fuel demand. For example, Germany, the fourth largest economy in the world, is planning a stricter lockdown from Wednesday to fight the virus.

Investors look forward to two meetings between the Organization of Petroleum Exporting Countries and its allies, including Russia, a group known as OPEC +.

OPEC + 's Joint Ministerial Monitoring Committee (JMMC), which oversees compliance among members, will meet on December 16, while OPEC + will meet on January 4 to examine the market after it has last decided to limit production to 500,000 barrels per day from next year.

In the United States last week, energy companies added the most oil and drilling rigs in a week since January as producers continued to return to the well.

On Sunday, two separate fires broke out at the Nigerian export terminal Qua Iboe and an oil pipeline in Iran, but most of them were contained.

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