Refined product cracks surge as vaccine news boosts demand outlooks

New York — Refined product cracks strengthened Nov. 9 as the entire energy complex moved sharply higher amid reports of a breakthrough in COVID-19 vaccine research.

At 1619 GMT, NYMEX December RBOB was up 8.09 cents at $1.1653/gal and December ULSD was 7.48 cents higher at $1.2174/gal.

Energy prices moved sharply higher overnight after news from Pfizer and BioNTech that their COVID-19 vaccine had shown itself to be more than 90% effective in a phase 3 trial.

The front-month ICE New York Harbor RBOB crack against Brent climbed to $6.34/b, on pace for the highest close since Oct. 13. The ICE New York Harbor heating oil crack against Brent was the strongest since late-July at about $9.24/b.

NYMEX December WTI was up $3.24 at $40.38/b and ICE January Brent was $3.02 higher at $42.47/b.

"Energy markets are among the biggest winners in the global macro landscape amid an announcement of a potentially effective vaccine being deployed by year-end," TD Securities analysts said in a note.

The vaccine announcement was especially bullish for energy sector equity prices. Stock prices of US oil companies ExxonMobil, Chevron, and ConocoPhillips were all trading more than 11% above their Nov. 6 close while those companies with more exposure in the refining space -- Valero, Marathon, and Phillips 66 -- were trading more than 15% higher.

In contrast, the Dow Jones Industrial Average was trading up about 4% while the S&P 500 was nearly 3% higher midmorning.