By Geoffrey Smith
Investing.com -- Crude oil prices soared to their highest since March on Tuesday, as optimism over the economic outlook for 2021 strengthened.
By 11:30 AM ET (1630 GMT), U.S. Crude futures were up 46% at $45.04 a barrel, while the international benchmark Brent was up 3.8% at $47.77 barrel.
U.S. Gasoline RBOB futures were likewise sharply higher, rising 4.8% to $1.2623 a gallon, their highest since early September.
On a day of little industry-specific news, oil and other industrial commodities ripped higher as investors bought ever more aggressively into the notion that the distribution of vaccines to fight Covid-19 will lead to a vigorous snapback in growth next year. Three companies have so far declared that their experimental drugs have success rates of 90% or more in preventing the disease. None, however, has official regulatory approval from any jurisdiction yet.
The enthusiasm was reinforced by the sight of the political fog lifting over Washington, with President Donald Trump all-but conceding the election to Joe Biden in the wake of Michigan's certification of its results on Monday. Biden has reportedly named former Federal Reserve Chair Janet Yellen as his pick for Treasury Secretary, which has encouraged hope in a broadly expansionary fiscal policy next year. Those hopes overlook the fact that the Senate is still likely to remain in Republican hands, complicating any efforts to get major fiscal expansion passed.
Signs from the industry itself still appear mixed: Royal Dutch Shell (LON:RDSa) and Total both announced the closure of big refineries on Tuesday, one in Louisiana, the other in France, in a reflection of the collapse in refining margins in recent months.
The market was also encouraged by what it chose to take as hints of further cooperation between Russia and Saudi Arabia in keeping excess supply off world markets for the coming months. President Vladimir Putin held a telephone call with Crown Prince Mohammed bin Salman earlier Tuesday. The Kremlin's summary of the conversation nodded to what it called their "effective" coordination of oil supplies this year, strengthening expectations that the planned increase in production by the so-called OPEC+ bloc will be pushed back for perhaps as much as three months to the start of April Newswires reported Saudi and Russian officials downplaying suggestions of coordination ahead of next week's ministerial meeting, at which any such decisions will be taken.
At 4:30 PM ET, the American Petroleum Institute will release its weekly estimate of U.S. crude and product stockpiles.