Oil Prices Hit Four-Month High on Virus Vaccine Prospects, EU Stimulus Deal

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SWITZERLAND, JULY 22 – Oil prices surged early on Tuesday hitting its highest level in over four months owing to results from a coronavirus vaccine trial and a boost from a European Union stimulus deal after five days of marathon talks.

Brent crude futures settled at $44.32 barrel, rising $1.04, or 2.4% while West Texas Intermediate (WTI) settled at $41.96 a barrel, gaining $1.15, or 2.8%.

Oil prices reacted positively to a promising coronavirus vaccine data released on Monday, though a vaccine remained months away at best. Several companies are testing new drugs for immunity to COVID-19.

“With major economies opening, demand should pick up for oil, and more so if a vaccine becomes available soon,’’ said Fawad Razaqzada, market analyst at ThinkMarkets.

Oil was buoyed by an agreement among European Union leaders on a 750 billion-euro ($859 billion) fund to revive coronavirus-hit economies.

The EU deal allows the European Commission to raise billions of euros on capital markets on behalf of all 27 states, an unprecedented act of solidarity in almost seven decades of European integration.

Crude prices also drew support from expectations that U.S. lawmakers could soon agree on a new stimulus package, as extended unemployment aid for millions of Americans will expire at month-end.

“Apparent progress on the U.S. stimulus deal, the EU recovery agreement and progress toward a successful vaccine have all merged this week to kick up demand for risky assets,” said Jim Ritterbusch of Ritterbusch and Associates.

However, surging coronavirus cases in countries including the United States and India is prompting fears of a second COVID-19 wave. Spain and Australia are currently battling new virus outbreaks.

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