This has been a rough year, but there’s some great news in the fight against COVID. At least two vaccines (one from Moderna and the other from a Pfizer/BioNTech tie-up) appear highly effective based on preliminary results. Just as important, the two vaccines could be available for tens of millions of individuals as early as December, with “wide” availability expected by April. More prophylactics may be on route, as 10 more vaccines are in large-scale efficacy tests. The Astra Zeneca/Oxford vaccine could potentially provide hundreds of millions of doses at very low cost, although initial results are scrutiny.

The development and deployment of two vaccines is hugely positively news for U.S. and world energy markets. Assuming widespread vaccine uptake, the U.S. could have highly manageable COVID caseloads as early as June of next year. By this time next year, life in the U.S. could approximate “normal” conditions again, with little to no constraints on mobility – or energy demand. We also believe that the risk of a spring crude products glut (especially for diesel) has been reduced by the vaccine – although refineries may maintain relatively high run rates through the winter in anticipation of higher post-vaccine demand. Finally, in a highly positive development for the entire O&G complex, 2021 jet fuel demand could set monthly records in the post-vaccination period. With jet fuel demand rebounding, the Permian’s light, tight oil could become more valuable.

Still, there is a long way from here to there: this winter is going to be highly difficult, and U.S. energy exports will remain hampered so long as the virus is not eradicated overseas, particularly in key consumer markets such as Europe and Asia.