AstraZeneca Vaccine Latest to Show Potential in Fighting Pandemic
November 23, 2020
The Baker Hughes Rig Count showed that crude oil rigs were down 5 to a total of 231 crude oil rigs compared with 671 crude oil rigs last year at this time. There has been a rush to get some wells in the Bakken, much of this is Federal land, in progress before the next administration come on board as many think this administration will restrict much of this activity.
The energy markets are higher this morning on what will amount to a short trading week with the Thanksgiving Holiday on Thursday. The number of traders on the job should be limited this week even though the market is not technically closed all day Thursday for Thanksgiving. It will be a light week of trading as is traditionally the case barring some big development.
The news of more progress on another vaccine is the bright spot this morning as the week begin with energy price higher on this news. A vaccine developed by the University of Oxford and AstraZeneca Plc has average 70% of patient from falling ill. Not as good as the 90% plus of the other two vaccine mention in the last week but a positive sign none the less. The market continues to look at positive news about vaccine against the rising cases of the virus and tries to gauge when there will be a return to “normal.”
Brent crude oil calendar spreads( the difference from one month to the next) for the first half of 2021 have narrowed in the last week. The contango ( front month is lower than the next month) is the narrowest it has been since before Saudi Arabia and Russia launched a price war in March. The spreads no longer favor storage which give the indication that the market is getting tighter targeting the middle of next year. The middle to back half of 2021 seems to be the time frame that many have focused on for a recovery to begin for several reasons. The assumption is that if the middle to back half of 2021 is the beginning of the recovery it will be then that all the pent up demand will be too much for the reduced production and prices will have to firm up.
The Thanksgiving holiday will not offer the market a big boost to demand like it usually see over the holiday. But lower refinery runs and export options to Europe being strong have help to offset some of this demand loss and offer some stability to energy prices.