Oil Market Tracking Vaccine Distribution

Oil Market Tracking Vaccine Distribution
Rigzone prognosticators identify trends to watch this week in the oil and gas markets.

(The views and opinions expressed in this article are those of the attributed sources and do not necessarily reflect the position of Rigzone or the author.)

Pfizer, Inc. (NYSE: PFE) and BioNTech SE (NASDAQ: BNTX) reported late Friday that they have received emergency use authorization from the U.S. Food and Drug Administration (FDA) for their mRNA vaccine BNT162b2 against COVID-19. The FDA action, which allows individuals ages 16 and over to receive the vaccine, kicked off the federal government’s “Operation Warp Speed” program to allocate and distribute the vaccine throughout the U.S. Logistics giants FedEx and UPS subsequently revealed that the wide-scale distribution effort is underway.

The oil markets will be closely monitoring the progress of Operation Warp Speed, according to one of Rigzone’s regular prognosticators. Keep reading to find out about other timely oil market topics to watch as well.

Tom Seng, Director – School of Energy Economics, Policy and Commerce, University of Tulsa’s Collins College of Business: The markets will now turn their attention to the actual distribution of the virus vaccine to see who gets it first, how effective it proves to be as well as what percent of the U.S. population will actually choose to receive it. It also appears that the U.S. did not reserve enough of the vaccine when it had the chance, which could delay its impact on the population.

Tom Curran, Senior Energy Services and Equipment Analyst in Equity Research, B. Riley FBR, Inc.: We’ll be focused on the next round of 2021 upstream capex announcements in this opening phase of annual exploration and production budget-setting, which should extend into February. Specifically, for financially strong operators, we’ll be seeking indications of what sustained WTI oil price (or price range) they’d need to anticipate in order to spend meaningfully more than the capex expectations that had been set over third-quarter earnings season. Those consensus capex figures, which will now start to be finalized or fine-tuned, seemed to assume an average 2021 WTI price of around $40 per barrel. At a Wall Street event last week, we understand Cimarex (NYSE: XEC) indicated that, so far, it has viewed the recent rise in oil prices solely as a harbinger of potentially stronger free cash flow in 2021 and left the WTI price assumption in budget price deck unchanged at $35 per barrel. What will other producers signal as they announce capex plans and share outlook updates on earnings calls?

Mark Le Dain, vice president of strategy with the oil and gas data firm Validere: We want to see how much of lower exports out of the U.S. is unique or if light sweet crude that returned out of Libya is taking market share and we are starting to see the result.

To contact the author, email mveazey@rigzone.com.


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