The WTI crude oil prices managed to extend their bullish overnight rally, hitting an intra-day high above the mid-$ 42.00 level, mainly due to the latest optimism over a potential vaccine for the highly infectious coronavirus. These hopes were fueled instantly after Pfizer Inc (NYSE: PFE) and BioNTech (F:22UAy) applied for US FDA emergency drug authorization for their COVID-19 vaccine on Friday. This, in turn, boosted hopes for a recovery in fuel demand, and contributed to the gains in crude oil.

Furthermore, the sentiment surrounding crude oil was further improved by renewed hopes that the Organization of the Petroleum Exporting Countries (OPEC) and its allies will maintain their current production restrictions, which has the effect of easing oversupply fears and boosting oil prices. Across the pond, the market risk-on sentiment also continues to benefit the higher-yielding crude oil. In turn, the upbeat market mood was receiving support from the hopes of a coronavirus vaccine and the Brexit talks. As a result, the broad-based US dollar failed to draw any safe-haven bids, edging lower on the day, which also played a leading role in underpinning the crude oil prices, as the oil price is inversely related to the price of the US dollar. Conversely, the gains in crude were capped by concerns about the escalation of the COVID-19 pandemic, which fueled fears of renewed lockdowns in several countries. WTI crude oil is currently trading at 42.59, and consolidating in the range between 42.30 and 42.62.

Despite the intensifying numbers of new COVID-19 infections and public health restrictions across the US and Europe, the renewed optimism over a possible vaccine for the highly infectious coronavirus has boosted the market risk tone, which remained supportive of risk-sensitive oil. These hopes were boosted after reports suggesting that vaccination against COVID-19 could start in 3-weeks in the USA, as the FDA will approve drugmaker Pfizer and German partner BioNTech’s experimental vaccine in mid-December. Simultaneously, the UK is expected set to give Pfizer’s vaccine the green light this week. This positive news on the vaccine front has boosted hopes for a global economic recovery in 2021.

As a result, the broad-based US dollar failed to gain any bullish traction, edging lower on the day as doubts persisted over the global economic recovery from COVID-19. Besides this, the risk-on market sentiment, backed by optimism over a potential vaccine for the highly contagious coronavirus, also played a major role in undermining the safe-haven US dollar. However, the losses in the US dollar became the key factor that kept a lid on any additional losses in the crude oil prices, as the oil price is inversely related to the price of the US dollar. Meanwhile, the US Dollar Index, which tracks the greenback against a bucket of other currencies, has dropped to 92.707.

Across the pond, the crude oil prices were further bolstered by renewed hopes that the Organization of the Petroleum Exporting Countries (OPEC) and its allies – a group known as OPEC+, which is led by Russia – will keep its current production restrictions in place. This will ease oversupply concerns and support the crude oil prices. As per the latest report, the alliance will meet on Nov. 30 and Dec. 1 to consider options regarding a delay in the output hike by at least three months, from January.