The prospect of a coronavirus vaccine has transformed how oil traders are evaluating the market’s prospects for the second half of 2021.
Headline Brent oil futures surged above $45 a barrel on Wednesday, a 15% increase from where they ended last week. But that’s a price for supplies in January, when the direct impact on oil demand from any vaccine is likely to be limited because of the time it would take for an immunization program to be rolled out.
What’s been more revealing is what traders call deferred timespreads. These gaps in price between contracts in the future — which serve as a gauge of expectations for market strength — are soaring. June 2021 is now trading at about 55 cents a barrel below December 2021. Late last week, it was at a $1.35 discount.
