It has been a good day to own shares of a product tanker company or a cruise line.
The reason is essentially the same: a return to travel is back in view after positive news surrounding development of a Covid-19 vaccine.
For the cruise lines, the picture is straightforward: a successful coronavirus prevention could shorten the timetable for vessels to resume sailing again.
And for product tanker owners such as Ardmore Shipping and Scorpio Tankers, it's all about the increased jet fuel cargoes they will carry if people decide it is safe to step on an airliner again, equity analysts said on Monday.
That's why Carnival Corp soared 35%, Norwegian Cruise Line 27% and Royal Caribbean Cruises 25%.
And in the clean products trade, it's why Ardmore shot up 20% and Scorpio Tankers 16%, outpacing even other tanker stocks on the crude side and their counterparts in other operating sectors.
"That's the story — jet fuel is the missing piece of the puzzle in terms of overall oil demand," Ardmore chief executive Anthony Gurnee told TradeWinds.
"If this is the first of many positive announcements on vaccine efficacy and distribution over the next month or two, then we may be in for a good recovery, both in shipping equities and the charter market going into 2021, with a general rebound in global economic activity and life returning to something close to normal much earlier than previously expected."
From the New York offices of Scorpio came another positive assessment from Scorpio president Robert Bugbee.
"As we've said before, vaccines are essential," he said. "They take away the darkness and the unknown and put sunshine on the horizon and certainty of future demand recovery."
However, Bugbee noted that the stimulus is not limited to jet fuel cargoes.
"It is not about any single product we carry, it is about all the products we carry," he said.
Still, two shipping equity analysts cast a strong vote for the jet fuel narrative.
"The vaccine news is a big positive for the jet fuel demand story, which had continually been viewed as a tough situation lasting beyond 2021 and perhaps into 2022. The refining stocks along with the product carrier stocks are all seeing major moves so far today," said Clarksons Platou Securities analyst Omar Nokta.
He noted that some refining stocks were seeing moves exceeding 20%.
Nokta's counterpart at Jefferies, Randy Giveans, saw a similar catalyst.
"Increased demand for air travel should help clear jet fuel inventories that have been an overhang on the space. Once inventories clear, this will put upward pressure on rates due to increased refinery utilization and transportation demand," he said.
But Giveans also noted that Ardmore and Scorpio Tankers had been among the most "sold off" names on his coverage list.
"They're certainly trading at the biggest discounts to NAV [net asset value] in our tanker coverage," he said.
All three major cruise lines announced last week that they were to remain suspended through at least next month, with no assurance when they would sail again.
The vaccine news supplies a critical lifeline and underscores that there will be a restart for the industry, though when that comes remains in doubt.
