Oil producers have more than a pandemic to worry about

FINANCIAL TIMES đź”’ | Oil executives are hardly alone in hoping 2021 will be better than the decidedly low bar of 2020. But even an effective Covid-19 vaccine may no longer provide a route out of the mess the industry finds itself in.

Eight months after the entire oil sector was first humbled by the demand-sapping pandemic, energy stocks have been buoyed by the first successful vaccine trial. Brent crude has risen almost 15 per cent to reach $45 a barrel. The beaten-down shares of BP, Royal Dutch Shell and ExxonMobil have jumped between 12 and 25 per cent.

Investors who missed the initial surge should be wary of the euphoria. Bearishness towards the sector was probably overdone, setting up a dramatic bounce at the first sign of good news. However, the industry has many more hurdles to come.

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