We are a mere 7 days into a new year, and have already seen the first oil rally in the markets. Many factors have played a role in the first rally of the new year. Oil has been tumultuous over the last 11 months but has seen some stability and positivity since Biden’s election win in November. Biden was confirmed by the senate to be the 46th President of the United States of America and he will have a democratic controlled House and Senate to put his plans into action.
The oil industry of Venezuela has had a tumultuous year under sanctions from the United States, poor refining network, supply shortages as well as ongoing political and social challenges. The situation has gone from bad to worse for the once dominant member of OPEC. According to two workers at state owned oil company Petroleos de Venezuela (PDVSA), Venezuelans have begun stealing crude from the idled oilfields and distilling homemade gasoline.
Nearly one month ago, U.S. oil futures hit a historic moment, dropping below zero for the first time. At that time traders were scrambling to pay buyers to take off crude futures, while month end rolls were looming. This morning, U.S. oil futures climbed roughly 9% to $32 a barrel, a price that would allow some of the lowest cost oil wells in the United States to break even. Oil prices are roughly half of what they were to start the year, but the slight uptick in driving across America, has helped rally the oil prices. Currently, 87E10 gasoline pump prices are at an average of $1.88 a gallon in the U.S., about $0.98 less than last year.
Last week, President Trump, announced the COVID-19 treatments and vaccines are on a “fast track” for development. But what does that mean? What is a typical timeline for development and what are the steps that needs followed in order to produce a successful vaccination or treatment?