Oil prices rise on Covid-19 vaccine hopes, tanker blast at Saudi Arabia

Oil prices rose on Monday, pushing Brent back above $50 a barrel, buoyed by hopes that a rollout of coronavirus vaccines will lift global fuel demand while a tanker explosion in Saudi Arabia jangled nerves in the market.

Brent crude futures for February rose 54 cents, or 1.1 per cent, to $50.51 a barrel by 09.50 GMT, while US West Texas Intermediate crude futures for January were up 46 cents, or 1 per cent, at $47.03 a barrel.

Prices also extended gains amid supply jitters after a shipping firm said an oil tanker was hit by an external source while discharging at Jeddah port in Saudi Arabia.

"Brent crude is supported by both financial and physical flows. The dollar is declining, the Brent crude curve is in backwardation and vaccines are being rolled out," said SEB chief commodity analyst Bjarne Schieldrop.

"We think that this rally has further to go." Brent and WTI have rallied for six consecutive weeks, their longest stretch of gains since June.

The United States kicked off its vaccination campaign against Covid-19, lifting hopes that pandemic restrictions could end soon and lift demand in the world's largest oil consumer.

An extension of Brexit talks among European powers also buoyed financial markets on Monday.

Major European countries continued in lockdown mode to curb the spread of Covid-19 which has reduced fuel demand. For example, Germany, the fourth largest economy in the world, plans to impose a stricter lockdown from Wednesday to battle the virus.

In the United States, energy firms last week added the most oil and natural gas rigs in a week since January as producers continued to return to the wellpad.

Two separate fires occurred at Nigeria's Qua Iboe crude oil export terminal and at an oil pipeline in Iran on Sunday but the incidents have mostly been contained.