The share price of ASX oil companies rose today after crude oil prices are trading near their highest levels since March, as signs that COVID-19 vaccinations in the United States could be underway within three weeks.
The ASX Energy Index (ASX: XEJ) is up by more than 3.5% in today’s trading, amid a broader rise in the S&P/ASX 200 Index (ASX: XJO) of 1.2% at the time of writing.
Why the rally in oil prices
Shares on the ASX broadly rallied today after AstraZeneca Plc (NYSE: AZN) became the latest major pharmaceutical company to report successful late-stage results for a potential COVID-19 vaccine. Markets in the United States and around the world were also bolstered by the announcement that vaccinations in the US, the most affected country in this pandemic, could be underway within three weeks.
However, not everything is rosy.
The prospect of an early vaccine not only affected the spot oil market, but has also reshaped the oil futures curve, with nearby futures prices rallying more than far-dated ones. This suggests that the market is anticipating a short-term surge in oil demand, but still subdued on the prospects of long term demand.
This sentiment was shared by rating agency Fitch, which released a report saying that although it expected improving trends in oil demand, its 2021 outlook for the North American energy market is negative, reflecting the large number of companies that forecasted negative outlooks in its survey.
Over the last three weeks, the energy sector has benefitted from various vaccine news. Hopes initially rose when Pfizer Inc (NYSE: PFE) announced its vaccine success in early November. The gold price, on the other hand, has slumped over the same period as growing optimism over an effective vaccine has rotated investors’ demand away from safe assets.
Oil prices today
These are the current oil prices at the time of writing:
- West Texas Intermediate for January delivery rose 1.5% to $43.43 a barrel
- Brent for January settlement is at $46.39 a barrel, up by 1%
Which energy shares have risen today?
The three biggest oil companies on the ASX had a good day today.
The Woodside Petroleum Ltd (ASX: WPL) share price has risen by 3.5% to $22.77 at the time of writing. The Beach Energy Ltd (ASX: BPT) share price has jumped over 10% to $1.90, while the Origin Energy Ltd (ASX: ORG) share price has increased 5% to $5.04.
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More reading
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- 5 things to watch on the ASX 200 on Tuesday
- Here’s why Moderna’s coronavirus vaccine could outsell Pfizer’s
- Why the Fortescue (ASX:FMG) share price is shooting up more than 5% today
Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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