Almost a year after the COVID pandemic started, 2020 might end on a good note since a large vaccine trial will start in the United Kingdom.
Although it does not mean that the COVID pandemic will end, it points a way out to the pandemic, promising transportation to resume soon and thus leading experts to think oil is a good value to currently invest in.
Also, 2020 was a great year for the oil industry to digitize itself, while gathering data about new oil-dependent technologies, such as drones and other ways to insure remote work.
Last but not least, several experts who gathered at the Reuters Commodity Trading Summit confirmed that Joe Biden’s plans and wishes to toughen policies regarding oil will take some time to take effect.
Transportation will resume soon
November came with great news: Pfizer has announced a successful COVID-Vaccine Phase 3 trial, giving hope to all those who are hoping to travel and go back to their pre-COVID life.
Not only this boosted the markets – U.S. market (S&P 500) climbed 2.5% mid-November, but it showed “a key factor in overcoming reluctance to take pandemic vaccines that have been developed at top speed”, said White House’ Dr Fauci.
Brent oil jumped by the most since June as Pfizer reported a potential Covid-19 vaccine breakthrough pic.twitter.com/zsQWROd74n
— Stephen Stapczynski (@SStapczynski) November 9, 2020
He also added a vaccine may be offered to priority groups starting next month. Pfizer share was up 2.85% on Monday, 16th November at $38.62 a share, while BioNTech, the second most-advanced laboratory for a COVID vaccine showed an exponential growth at $106 a share, almost doubling its value since last April.
To sum it up, individuals will be able to fly and drive anywhere within a few months, which is what Forbes implied in a story published on November 13th. “A successful vaccination would mean that people can travel again – putting airplanes, cruises, resorts and hotels back in action”, thus increasing oil demand.
The Oil Industry Has Successfully Digitized
In the meantime, remote workers and machines that help keep track remain in high demand.
As a matter of fact, “two of the top oilfield services providers reported that most of their drilling activity had been supported by remote work during the second quarter of the year”, reports OilPrice.com, adding that most companies will adopt automated work as a permanent option.
A recent EY study confirmed that 85% of the world’s oil companies are using advanced analytics, which will ensure continuity although an unpredictable lockdown restrictions would come to happen.
Read on Alvexo: “Starbucks Forecasts Steep Growth in 2021”
Biden Plans Will Not Slow Oil Down
Last but not least, one of the main worries of oil investors is the change of the U.S Presidency, from a pro-oil Republican President to a more renewable energies-focused Democratic President.
As a matter of fact, it seems that it will take several years before Biden can truly affect the oil market, notes Bic Magazine.
“My guess is that there won’t be a rule change in shale production, but it will become harder over time to invest in fossil fuels. I don’t think it will have a material impact over the next year or two.” declared Marco Dunand, chief executive of Mercuria Energy Trading during a Reuters conference.
This means oil should know a strong come-back once travel restrictions are eased, after a successful vaccination period.
Markets rejoiced over this news. Within the past week, Benchmark WTI Brent has already increased by 1.47% at $40 a barrel, while British Brent rose by 1.24% at $43.31.
The above content is considered to be market commentary information and shall not be perceived as independent investment research or investment advice.
Take The Next Step with Alvexo Leave your details and we’ll reach out shortly.