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Third week gains on oil, with vaccine hopes

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Oil prices rose nearly 1% on Friday, backed by successful COVID-19 vaccine trials. While the third week in a row has increased, the lockdowns in many countries following the spread of coronavirus infections are putting pressure on prices.

Brent crude LCOc1 futures rose 76 cents, or 1.7%, to settle at $44.96 a barrel.

The more active West Texas Intermediate (WTI) January crude contract CLc2 gained 52 cents, or 1.2% to $42.42 a barrel. The WTI contract for December CLc1, which expired on Friday, rose 41 cents, or 1%, to settle at $42.15 a barrel.

Both benchmarks gained about 5% this week.

Expectations for effective COVID-19 vaccines have strengthened oil markets this week. Pfizer Inc announced that it will apply to US health regulators on Friday for emergency use authorization of the new coronavirus vaccine.

Despite positive news about the vaccine every day, the implementation of a global vaccination campaign will take time and oil demand will be negatively affected in this process.

In addition, hope increased that OPEC, Russia and other producers would control crude oil production.

OPEC +, which will meet on 30 November and 1 December, is looking for options to postpone the plan to reduce the cuts from 7.7 million barrels per day by 2 million barrels per day from January to at least three months.

Oil prices are also backed by signs of this incentive deal in Washington, as cases increase in the United States and the ongoing debate over providing further COVID-19 relief is agreed.

However, as Libya increased production to 1.25 million barrels, over-supply concerns continue to weigh.

An early indicator of future production, the number of US oil and gas drilling rigs has dropped to around 310 this week after reaching its highest level since May last week. Oil drilling rigs alone are down to 231.

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