Energy: The End Of The Tunnel

More news on COVID 19 vaccines is raising oil demand prospects in the short term and longer-term has oil trading at a three month high, and the best is yet to come. Global supplies have tightened, and oil production has fallen, and more robust economic data and better than expected demand in Asia are starting to bolster prices. OPEC meets on November 30 and tries to decide whether their extension of production cuts will be extended for 3 or 6 months. With a vaccine on the horizon, the dynamics for oil look a lot more bullish. 

Photo by Zbynek Burival on Unsplash

The Wall Street Journal reports that, "Astras Zeneca (AZN) 2.35% PLC and the University of Oxford said their COVID-19 vaccine was as much as 90% effective in preventing infections without serious side effects in large clinical trials, boosting hopes that a third Western-developed shot could be authorized for use before the end of the year. The partners said Monday that there were no serious safety events related to the vaccine and that it was well tolerated across different dosing regimens. Its efficacy ranged from 62% to 90% depending on the dosage given, with an average of 70%, they said. The results bode well for the near-term availability of the third vaccine to battle COVID-19 after a shot created by Moderna Inc. (MRNA) and one made jointly by Pfizer Inc. (PFE) 1.41% and Germany's BioNTech SE (BNTX) 9.63% were found to be more than 90% effective in their late-stage trials. Pfizer and BioNTech last week said they had asked the U.S. Food and Drug Administration to permit the use of their vaccine.

China and Russia have both deployed their vaccines at home and overseas. Chinese authorities have inoculated nearly one million Chinese people with a vaccine from one state company, though it has yet to provide concrete clinical evidence of its efficacy. According to the journal, Russia has said its homegrown vaccine has an efficacy rate above 90%.

This news is significant. Oil demand is already rising in China and may start rising in other parts of the world as the expectations for returning to normalcy start to get priced in. We will see a supply deficit in the second half of the year, and the curve is starting to price that in as well.

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