This year has been a true rollercoaster ride for the US stock market, but it rapidly ends on a high note.
S&P 500 The first two weeks of November have climbed by about 11% as the world is close to eradicating one of mankind’s greatest threats in modern history.
Oil is anything but dead.
And here are two reasons to stick to oil:
# 1 Vaccine Driving Optimism Will Move Things A week after the drug giants Pfizer And Biontech Gave the world a hope Effective Kovid-19 Vaccine, fellow worker Modern Inc. (Nasdaq: mRNA) has revealed potentially better treatment.
Moderna Has reported Its COVID-19 vaccine candidate, mRNA-1273, has demonstrated efficacy rates of 94.5% in preliminary tests and remains stable at 2 ° to 8 ° C (36 ° to 46 ° F), or at approximately a standard temperature. Same operating temperature home or medical refrigerator, for at least one month. In contrast, the Pfizer vaccine requires a colder temperature of -94 ° F (-70 ° C) and for the vaccine to remain viable up to -109 ° F, which can be a major challenge in some places. .
Not surprisingly, the energy sector — one of the hardest hit by the epidemic — has jumped 23.4% since the Pfizer vaccine news feed hit last week alone.
The oil and gas industry has been deeply out of favor over the past few years, and trying to make a downward call on the bear market can be a foolish act. However, the latest developments are expected for incurable optimists that the worst may end up in a rearview mirror for the industry.
Source: CNN Money
More vaccines in the pipeline
In addition to his never ending tweetstorm, Trump has primarily kept a low public profile after losing to Biden in America’s most divisive election in modern history. But a few days ago, he came out and publicly accused Pfizer of delaying his Covid-19 vaccine in an overarching way to waste his chances in re-election. Related: 25 energy stocks to buy or sell after the election
Well, it seems, many other pharmaceutical companies are guilty of the same curious times of their own — perhaps even better — vaccines.
CureVacKey (NASDAQ: CVAC) It is said that its CVnCoV vaccine is stable for three months at +5 Celsius, Or standard refrigerator temperature. The vaccine remains stable for up to 24 hours at room temperature.
Sanofi And GlaxoSmithKlineHas announced that their two-dose recombinant protein vaccine can be stored between 2 ° C- 8 ° C.
Johnson and johnson The pipeline also has a Kovid-19 vaccine which, if successful, can be refrigerated for at least three months at a refrigerated temperature of 2 ° C – 8 ° C and -20 ° C for two years.
In summary, there is no shortage of Kovid-19 vaccine candidates that are potentially more stable than the Pfizer / Biontech vaccine.
This is music to the ears of the oil and gas market, with the Kovid-19 coming after a second wave of infection effectively killing the oil rebound.
Better still, the Pfizer and Moderna vaccines could move into mainstream distribution in just a few weeks. Indeed, by the middle of 2021, widespread vaccine penetration is expected.
It may be in time to validate OPEC’s latest estimates, Which bounced back the oil market to a historically high pace the following year. According to the July report, OPEC saw oil demand in 2021 at 25.8 to 29.8 million barrels per day, slightly above level in 2019.
Obviously, a lot will hinge on OPEC’s ability to maintain production discipline, but as of now, the alliance remains committed after the harsh lessons of the last few months. Related: Oil Major Not Worried About a Biden Presidency
That said, a solid recovery in oil demand can take months even in the event of a successful vaccine. The IEA predicts a decrease in demand for oil by 5.8 million barrels per day in 2021, just 300,000 barrels per day more than its forecast a month before Pfizer announced its vaccine.
# 2 Transition of our energy will not happen without oil and gas
No matter how big the hydrogen propagation, or how much money is being put into it as an answer to our clean energy future, it is still not a near-solution.
It is science fiction that oil and gas will suddenly disappear due to the progress of renewable energy. This is all going to be long lasting, even if the media looks like it is going to happen tomorrow.
It has been clearly established that natural gas will be the bridge to a clean energy transition, especially because electricity will likely be one of our most important energy sources, and natural gas is at least cleaner-burning than oil.
For the near-to-medium term, it is only COVID demand, which is actually troubling oil, and all positive vaccine news will likely continue the momentum going forward. And in the meantime, if oil demand starts to slow down compared to pre-COVID rates as we renew, then the demand for natural gas should still be strong.
By Alex Kimani for Oilprice.com
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