The announcement that a Covid-19 vaccine developed by Pfizer/BioNTech is over 90% effective in trials sent world equity markets and oil prices soaring earlier this week. However, while this news has changed the sentiment, nothing has changed in terms of the near-term oil supply and demand fundamentals. The vaccine is unlikely to boost world economies until later in 2021 while global oil demand is under renewed threat due to escalating Covid-19 cases, most notably in
Europe and the US, where new cases are hitting levels well above those seen during previous peaks.  It remains to be seen whether too much hope is being placed in the vaccine. The virus resurgence in many countries prompted the International Energy Agency (IEA) to drastically revise down its demand expectations. Global oil demand in Q3 2020 has been revised down by 0.4 million b/d, Q4 2020 by 1.2 million b/d and Q1 2021 down by 0.7 million b/d. However, the IEA notes that these revisions have been heavily focused on OECD countries, while demand expectations for non-OECD economies have actually been revised up, mainly due to developments in China and India. Chinese oil demand has already climbed above pre-pandemic levels while Indian oil demand is expected to average in Q4 2020 just marginally below levels seen in Q4 2019.

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