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This year has been a real rollercoaster ride for the US stock market, but it is increasingly looking to finish on a high note.
The S&P 500 it grew nearly 11% in the first two weeks of November as the world nears defeat one of humanity’s greatest threats in modern history.
Oil is far from dead.
And here are two reasons to stick with oil:
# 1 Vaccine optimism will continue to drive things forward Just a week later the pharmaceutical giants Pfizer is BionTech gave the world the hope of a effective Covid-19 vaccine, peer Moderna Inc. (NASDAQ: MRNA) unveiled a potentially better cure.
Modern he reported that its COVID-19 vaccine candidate, mRNA-1273, has shown efficacy rates of 94.5% in early tests and remains stable between 2 ° C and 8 ° C (36 ° F and 46 ° F), or more or minus the same operating temperature as a standard household or medical refrigerator, for at least one month. In contrast, Pfizer’s vaccine requires a much cooler temperature of -94 degrees Fahrenheit (-70 degrees C) and as low as -109 degrees Fahrenheit for shipping for the vaccine to remain viable, which could pose a major challenge in some locality.
Unsurprisingly, the energy sector, one of the hardest hit by the pandemic, has been in tears since the Pfizer vaccine hit the news, climbing 23.4% in the past week alone.
The oil and gas industry has been deeply out of favor in recent years and trying to hit a low in the bear market could be a silly fee. However, the latest developments offer hope to hopeless optimists that the worst may finally be in the rearview mirror for the industry.
Source: CNN Money
Other vaccines in the pipeline
In addition to his interminable tweetstorm, Trump mostly kept a low public profile after losing to Biden in one of the most controversial US elections in modern history. But a few days ago, he went out and publicly accused Pfizer of delaying his Covid-19 vaccine, ostensibly in an attempt to ruin his chances of re-election. Related: 25 energy stocks to buy or sell after the election
Well, guess what, it looks like several other drug companies are guilty of the same curious timing as their, perhaps even better, vaccines.
CureVac(NASDAQ: CVAC) says his CVnCoV vaccine is stable for three months at +5 degrees Celsiusor the standard refrigerator temperature. The vaccine remains stable up to room temperature ready for use for 24 hours.
Sanofi is GlaxoSmithKlineannounced that their two-dose recombinant protein vaccine can be stored between 2 ° C and 8 ° C.
Johnson & Johnson also has a Covid-19 vaccine in the works, which, if successful, could be stable in refrigerated temperatures of 2 ° C – 8 ° C for at least three months and up to two years at -20 ° C.
In short, there seems to be no shortage of candidate vaccines for Covid-19 potentially even more stable than the Pfizer / BionTech vaccine.
Brighter perspective
This is music to the ears of the oil and gas market, coming after a second wave of Covid-19 infections effectively killed the oil rebound.
Better yet, Pfizer and Moderna vaccines could go into mainstream distribution in a matter of weeks. Indeed, broad access to vaccines is expected by mid-2021.
It may be just in time to validate The latest OPEC projections, which required a recovery of the oil market next year at a historically rapid pace. According to the July report, OPEC sees oil demand increase by around 25% to 29.8 million barrels per day in 2021, slightly above the levels recorded in 2019.
Of course, much will depend on OPEC’s ability to maintain production discipline, but so far the coalition has remained committed after the tough lessons of recent months. Related: Oil Majors Are Not Worried About a Biden Presidency
That said, a solid recovery in oil demand could take months, even if the vaccine is successful. The IEA has forecast a pickup in oil demand of 5.8 million barrels per day in 2021, only ~ 300,000 barrels per day more than forecast a month ago after Pfizer announced its vaccine.
# 2 Our energy transition won’t happen without oil and gas
No matter how massive the hydrogen hype is or how much money is invested in it as a response to our clean energy future, it’s still not a near-term solution.
It is science fiction to imagine that oil and gas will suddenly disappear due to the advancement of renewable energy. This is all long-term, even if the media makes it seem like it will happen tomorrow.
It has been clearly established that natural gas will be the bridge to a clean energy transition, especially as electricity will likely end up being one of our most important energy sources and natural gas burns at least cleaner than oil.
For the short to medium term, it’s only cutting down on COVID demand that is really knocking down oil, and all the positive news about vaccines will likely continue to drive the momentum forward. And in the meantime, if oil demand starts to slow down from pre-COVID rates as we support renewables, demand for natural gas should emerge even stronger.
By Alex Kimani for Oil “
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