Oil Prices in Violently Positive Reaction
Oil prices reacted in a “violently positive” manner on Monday as the market priced in the possibility of a quicker roll-out of a global vaccine, Rystad Energy’s head of oil markets, Bjornar Tonhaugen, outlined in a statement sent to Rigzone.
“In the eyes of traders, a vaccine will help ensure no future lockdowns are needed and will bring people back to the streets, allowing road and air transport to recover,” Tonhaugen said in the statement.
“Essentially a vaccine is a bullish sign against Covid-19 pessimism. The pandemic is what keeps oil demand from recovering and this is clearly positive news for the market,” he added.
Tonhaugen predicted, however, that the “violent” price reaction will probably reverse soon, “as the market realizes the near-term impacts on oil demand will be non-existent”. A vaccine is “not exactly coming tomorrow”, Tonhaugen highlighted.
“The reality is that the timing of a global roll-out of any vaccine is further down the road than some believe, so it will take a long time to apply it to the global population,” Tonhaugen said.
“This means that the vaccine news are indeed bullish, but mostly bullish on a longer-term prospect. It does, though, give a sense of how severely impacted oil markets are by the coronavirus restrictions, as the market will look to digest more details about the trial results,” he continued.
Tonhaugen also warned that the fast-tracking of multiple vaccines doesn’t mitigate the risk that many U.S. states will have to return to some form of lockdown this autumn/winter.
“Immunity doesn’t arrive the day the vaccine is released, it takes months,” he stated.
Pfizer (NYSE: PFE) announced on Monday that its vaccine candidate was found to be more than 90 percent effective in preventing Covid-19 in participants without evidence of prior SARS-CoV-2 infection. The study enrolled 43,538 participants and no serious safety concerns were observed, Pfizer highlighted.
“Today is a great day for science and humanity,” Albert Bourla, Pfizer’s chairman and chief executive officer, said in a statement on Monday.
“The first set of results from our Phase 3 Covid-19 vaccine trial provides the initial evidence of our vaccine’s ability to prevent Covid-19,” he added.
The price of Brent crude oil rose by almost $3 per barrel on Monday. The price of West Texas Intermediate increased by more than $3 per barrel.
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