Raymond James: Update on Oil Market April 12

[dan_s]

RJ's Energy Stat: New Waves in EU, India, LatAm Erase 10 Months of Reopening Progress; Are Vaccine Passports the Answer?

To state the obvious, the path to a post-pandemic "new normal" is far from smooth, and the past six weeks have amply illustrated that. As we published our global economic reopening update on March 1, it seemed as if the tide had definitively turned, and lockdowns could be almost entirely in the rearview mirror by the end of April. Well, not even close. While lockdowns are almost nonexistent at this point in the U.S., in much of the world the situation has sharply worsened. Our reopening tracker (with all of the underlying data included in the appendix) has fallen to the lowest level since June 2020, with 1.05 billion people around the world currently in lockdown. It surely doesn't "feel" that way, especially for our U.S. readers, but those are the numbers, and it is among the reasons for the recent pullback in the oil market.

Europe remains the epicenter of lockdowns - accounting for 47% of the worldwide total - but the intense COVID surges in South America and South Asia mark a big change from January/February. The vastly diverging vaccination rates from country to country, compounded by virus variants, are adding to the messy hodge-podge of how reopening is progressing. In this context, and in collaboration with Raymond James' airline analyst, today we delve into the concept of "vaccine passports" as a potentially useful but controversial means of reopening. This is especially relevant via-a-vis long-distance travel, bearing in mind that aviation, of all the transport modes, remains the furthest away from full recovery. All of this feeds into our forecast of oil prices ending 2021 above current levels, en route to cyclical highs in 2022.