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This year has been a roller coaster ride for the US oil and gas market, but increasingly it is looking to end on a high note.
the The industry has grown almost 16% in the past 10 days alone, as the world moves closer to defeating one of humanity’s greatest threats in modern history.
The outlook is improving for the oil and gas bulls.
Here are three main reasons bulls are likely to have the upper hand in the future.
# 1. Vaccines against covid-19 The oil and gas industry has been deeply out of favor in recent years, due to huge supply / demand imbalances that have only worsened after the Covid-19 strike. Indeed, trying to call a bottom in the bear market has been largely an idiotic race as one step forward (OPEC production cuts) was immediately taken by several backward steps (massive destruction of demand. due to global lockdowns).
However, the latest developments now offer hope to incurable optimists that the worst may finally be in the rearview mirror of the industry.
At least ttwo effective COVID-19 vaccines now marks a major turning point in the fight against one of our greatest existential crises.
Two weeks ago, Pfizer (NYSE: PFE) and BioNTech (NASDAQ: BNTX) reported that their common mRNA-based COVID-19 vaccine candidate, BNT162b2, has been shown to be nearly 95% effective in preventing Covid-19 infections in approximately 44,000 patients tested. A few days ago, companies confirmed these figures in their final analysis, in particular their 94% effectiveness in those over 65 years of age.
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With the good news, however, comes a small caveat: Pfizer’s vaccine needs a much cooler temperature of -94 degrees Fahrenheit (-70 ° C) and down to -109 degrees Fahrenheit to be shipped for. that the vaccine remains viable, which could pose a major challenge. in some places.
So news that ModernThe (NASDAQ: MRNA) Covid-19 vaccine candidate, mRNA-1273, has demonstrated similar efficacy to that of the Pfizer vaccine but remains stable at more manageable temperatures 2 ° to 8 ° C (36 ° to 46 ° F), or roughly the same operating temperature of a standard home or medical refrigerator, for at least a month, was definitely great news.
More encouraging: Moderna reported that its Covid-19 vaccine would cost $ 25 and $ 37 per dose depending on the quantity ordered, roughly the average of a common flu vaccine, which costs between $ 10 and $ 50 .
Even more encouraging news: The EU is expected to speed up approval of the Pfizer and Moderna vaccines, which means they could go into general distribution in its jurisdiction in a matter of weeks. Europe is experiencing the biggest second wave of Covid-19, with Germany, Poland, France and Spain having returned to lockdown in an attempt to stem the spread of the deadly virus.
# 2. More vaccines in preparation Besides his never-ending tweet, Trump has mostly kept a low public profile after losing to Biden in one of the most controversial US elections in modern history. But a few days ago, he came out and publicly accused Pfizer of delaying his Covid-19 vaccine ostensibly in an attempt to ruin his chances of re-election.
Well guess what, it looks like several other drug companies are guilty of the same curious moment about their own – maybe even better – vaccines.
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The Pfizer and Moderna vaccines are based on Messenger RNA technology, which is not only faster to manufacture and develop, but also well suited for rapid adaptation.
Unfortunately, messenger RNA, or mRNA, is also delicate, requiring careful cold storage and handling which complicates distributions.
The good news: There are several other vaccines that may be better suited for wider distribution.
AstraZeneca (NASDAQ: AZN) and the University of Oxford reported that their vaccine is 62-90% effective depending on the dosage, but is cheaper than the Pfizer or Moderna vaccine and can also be stored at higher temperatures. high, which makes it more accessible for low-income people. nations. The AstraZeneca candidate is an adenovirus vector platform that gives people an inactivated virus to stimulate an immune response, which makes it more stable than the “mRNA-based” vaccines from Pfizer and Moderna.
CureVacfrom (NASDAQ: CVAC) says his CVnCoV vaccine is stable for three months at +5 Celsius or the standard refrigerator temperature. The vaccine remains stable at room temperature ready to use for 24 hours.
Sanofi and GlaxoSmithKline‘s announced that their two-dose recombinant protein vaccine can be stored at 2 ° C to 8 ° C.
Johnson & johnson also has a Covid-19 vaccine in the pipeline, which, if successful, could be stable at refrigerated temperatures of 2 ° C to 8 ° C for at least three months and up to two years at -20 ° C.
In short, there does not appear to be a shortage of Covid-19 vaccine candidates that are potentially even more stable than the Pfizer / BioNTech vaccine.
# 3. Undervalued sector
The energy sectors in the United States and around the world have been deeply out of favor over the past six years – so much so that the sector could now be significantly undervalued.
In fact, the sector is now trading at a price-to-book ratio of less than one, the lowest in about seven decades.
That wouldn’t mean much in the face of the huge supply / demand imbalances that rocked the industry at the start of the year. But the situation is very different now.
Over the past several months, OPEC has demonstrated admirable production discipline and will seek to maintain this trajectory to avoid derailing the recovery in oil prices.
The long-term outlook for oil prices may not be too dire, either.
The era of renewable energy may be upon us, but the demand for oil may continue to grow and only affect one plateau in the late 2030s according to OPEC estimates. Granted, these optimistic projections could quickly turn bleak if many more governments take the British way and decide to ban gasoline and diesel vehicles on their roads by the start of the decade. But so far, indications are that the fossil fuel sector could have at least several years of dominance as long as the global pandemic can be quickly brought under control – and the prognosis is pretty good.
By Alex Kimani for OilUSD
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