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It has been a solid start to the week for oil markets, reflecting the vaccine tailwind driving strong risk appetite across all assets.

Although COVID-19 cases continue to mount, the economic impact at present appears lessened by low desire to return economies to full lockdown – the incoming Biden team indicated as much at the weekend flagging its preference for targeted measures.

On the supply side, the Baker Hughes rig count showed a +10 w/w build to 236, continues to advance off the lows but is still very far below the ~400 needed to maintain production in the lower 48.

Still, sentiment around the short-term oil price will be determined by COVID-19 demand effects and OPEC+ actions to offset them. At the same time, the longer-term market is a vaccine-driven one.

Ultimately, if we judge economic recovery, particularly through the lens of oil markets from planes, trains, automobiles, and activity moving from point A to B, with multiple high efficacy vaccines in the pipeline, there is good chance mobility will return close to pre-pandemic levels later in 2021

Oil rallied more than 4% per cent on the Moderna vaccine news, erasing Friday’s losses. Additionally, Oil prices caught a most welcome boost on the heels of very positive Asian data from both China and Japan.

The move above $42 proved unsustainable, but the sentiment is upbeat, given the logistical requirements for the Moderna vaccine are less stringent than for the Pfizer one. And despite stern COVID-19 warnings from German Chancellor Angela Merkel and California sounding the alarm bell by dramatically rolling back reopenings amid unprecedented COVID-19 surge, oil markets remained in positive territory for the whole session.

Indeed, China’s thirst for all things oil was evident in yesterday’s data after reporting 14.09 million barrels per day of oil demand for October, topping a previous daily record. This as gasoline demand soared due to the early October holiday.

All eyes and ears will be trained on the OPEC+ Joint Ministerial Monitoring Committee (JMMC) today, which can recommend policy steps to OPEC+ as demand remains subdued due to increasing COVID -19 restrictions, expectations, and the market base case scenario is for a quota extension for 3-6 months.

The meeting of the OPEC+ JMMC would largely be devoted to quota cuts introduced back in April to stabilise the energy markets. The nations are currently slashing 7.7 million barrels a day collectively until December 31. After that, the OPEC +producers plan to ease the cuts further.

The JMMC is an excellent opportunity for OPEC+ ministers to assess the global oil market’s state and compliance with the OPEC+ agreement.

Still, I would be surprised if it were not also used to gauge appetite for the possibility for deeper cuts to help mitigate the negative impact of the surprise uptick in Covid-19 infection in Europe and the US in recent weeks. Anything that will show OPEC willingness to do what it takes while maintaining a unified front will be perceived positive for the oil market

Since the last JMMC, Russia has appointed a new energy minister, Nikolay Shulginov, but for policy continuation efforts and as part of the handover process, his predecessor Alexander Novak was promoted to the deputy is still expected to oversee OPEC + issues in a collaborative fashion ad will take part in Tuesday meeting.

Both Brent and WTI curves are firmer, signalling the rebalancing is underway.

Oil market analysis and insights from Stephen Innes, Chief Global Market Strategist at Axi