Oil prices edged higher on Tuesday on positive news on vaccine trials, but are still within the narrow trading band of the past three weeks amid fears that new lockdowns could derail a recovery in demand.
West Texas Intermediate (WTI) gained $1.46, or 3.67%, to $42.24.
Brent futures were up $1.44, or 3.43%, at $44.6.
The closing prices of both Brent and WTI have traded within a $2 channel so far this month.
Prices were supported by promising vaccine developments as drugmakers and medical institutions rush to find a way to counter the world’s worst health crisis in a century.
In China, some cinemas reopened on Monday after a six-month closure, raising hope a recovery from the pandemic is holding in the world’s second-largest economy, where the outbreak first started.
Analysts, however, cautioned about the fragile nature of the oil market, raising concerns that strong demand from China could dry up in coming months.
“Despite the calm, oil markets also remain in some degree of distress, with China importing way more crude than its refineries can process,” Eurasiagroup said in a note.
Meanwhile, countries from the United States to India are posting record numbers of infections, while some nations such as Spain and Australia are battling renewed outbreaks.
More than 14.6 million people have been reported to be infected by the novel coronavirus globally and 606,979 have died, according to a Reuters tally.
Early data from trials of COVID-19 vaccines released on Monday, raised confidence that a vaccine may be created although any breakthrough will take time to reach the billions of people needed.
In the first big energy deal since the coronavirus crushed fuel demand, Chevron Corp said on Monday it would buy oil and gas producer Noble Energy Inc for about $5 billion in stock.