Oil traders unwind bearish bets as vaccine hopes fuel optimism | Reuters

Oil traders unwind bearish bets as vaccine hopes fuel optimism | Reuters

Oil traders rushed to unwind a bevy of bearish bets after Pfizer announced promising results for its COVID-19 vaccine, shaking up energy markets that were primed for demand to sink into the winter on increased lockdowns and rising coronavirus infections.

Crude prices plunged this year as global demand was crushed due to travel restrictions to curb the spread of COVID-19. Coming into this week, investors have been betting heavily on further weakness in prices as worldwide infections surpassed 50 million and numerous countries re-imposed lockdowns to slow the virus’s spread.

That changed on Monday morning, when Pfizer said its vaccine was more than 90% effective in preventing COVID-19, sending equity and commodities markets surging. Brent crude surged by 7% as those holding short positions rushed to reverse them to hold down losses, with more front-month contracts traded Monday than any day since April.

“More longs are coming in but it’s a mix of short covering too for sure,” a trading source at a bank said.