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  • WTI witnessed some short-covering move on Monday and snapped two days of losing streak.
  • The latest optimism over a potential COVID-19 vaccine provided a strong boost in the last hour.
  • Technical buying above the $39.00 mark further contributed to the strong intraday momentum.

WTI futures witnessed some aggressive short-covering move on Monday and surged to near three-week tops, around the $40.65-70 region during the mid-European session.

The latest leg of a sudden spike over the past hour or so came after Pfizer said its experimental vaccine was more than 90% effective in preventing COVID-19. This was seen as a major victory in the fight against the highly contagious disease and revived hopes for a swift fuel demand recovery.

It is worth reporting that Keisuke Sadamori, the International Energy Administration (IEA) Director for Energy Markets and Security, said in a Reuters interview this Monday that fresh lockdown measures imposed in Europe to contain the COVID-19 contagion would lower the global oil demand outlook

Meanwhile, the news provided an additional boost to the already strong global risk sentiment, supported by the Democratic candidate Joe Biden’s victory in a nail-biting 2020 presidential election. The upbeat market mood further drove flows towards the risk-sensitive oil and remained supportive.

Apart from this, possibilities of some short-term trading stops being triggered on a sustained move beyond the $39.00 mark further contributed to the strong momentum. Oil prices have now moved within striking distance of the $41.00 supply zone, which if cleared should pave the way for further gains.

Technical levels to watch