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Crude oil price finally broke-out yesterday as traders reflected on the latest vaccine news and the potential that demand will bounce back in 2021. Brent, the global benchmark, rose to a high of $48.70, the highest level since March this year. Similarly, the West Texas Intermediate (WT) shot-up to a high of $45.50, a sharp reversal to early this year when the price turned negative. Vaccine boosts crude oil price The biggest catalyst for the current crude oil price rally is a Covid vaccine. This month, Pfizer revealed that its vaccine was 95% effective in a large-scale test. Similarly, Moderna, an American company, said that its vaccine was 94.5% effective. And this week, AstraZeneca said that its product was 90% effective when used in a small dose. These are excellent numbers considering that other popular vaccines have an efficacy rate of about 70%. A vaccine is a good thing for oil prices and other base commodities because it increases demand as people travel more. For example, if everyone is vaccinated, global travel could return back to pre-pandemic levels. Similarly, people will return to their offices and consume more fuel as they travel. Also, a vaccine boosts sentiment in the market. Indeed, crude oil was not the only asset soaring yesterday. In the United States, the Dow Jones closed above $30,000 for the first time ever. Similarly, the S&P 500 closed at a record high. US transition path clear Crude oil price is also rising because of the recent decision by Donald Trump to start co-operating with the incoming president. That announcement, coupled with the president’s legal losses, has brought-up more confidence among investors. Joe Biden will have a different agenda related to oil prices than Trump. For one, he has talked about climate change and the need to reduce emissions. He has also criticised the fracking industry in the US but has said he won’t ban it. Instead, he will not authorise new projects in public land. He will also add more regulations to the sector, which will make it relatively tough for players in the sector. All these measures will have a positive impact on crude oil price because they will likely lead to lower production. Indeed, looking back, the price of oil reached an all-time high during Obama’s presidency. In the current administration, oil has struggled to move above $75 per barrel. US inventories ahead Oil traders will today focus on last week’s oil inventory numbers from the United States. Analysts expect the data from the Energy Information Administration will show that inventories rose by 127,000 barrels last week. That will be a decrease from the previous week’s increase of 768k barrels. Earlier today, data from the American Petroleum Institute (API) showed that inventories rose by more than 3.8 million barrels. In the past, numbers from the API and EIA tend to have significant differences. Higher inventories are usually viewed as a negative thing for crude oil prices. Looking ahead, investors are also focusing on the upcoming meeting by OPEC+ leaders. This is usually an annual meeting where the leaders deliberate on supply and pricing issues. In a report yesterday, analysts at Goldman Sachs said that they expect the cartel to postpone the planned 2 million barrels per day increase in production that was to come in January this year. They wrote: “These headlines once again call into question the future and purpose of the cartel, compounding on the brief March Saudi-Russia price war and Qatar’s departure from the group last year.” Brent technical analysis Looking at the daily chart, we see that Brent crude oil price has managed to break-out after months of consolidation. The price has moved above the important resistance level at $46.36, which was its September high. It has also cleared the 50% Fibonacci retracement level. Therefore, I suspect that the price will continue rising, with the next main resistance being at the $50 level followed by $55. WTI technical overview Like Brent, the WTI also broke-out yesterday and reached a high of 45.30. It also moved above the previous resistance level at 43.70 and the 61.8% retracement level of 40.27. Therefore, I suspect that the price will continue soaring as bulls aim for the next resistance at $50, which is just 10% above the current price. WTI oil price technical chart