Chinese COVID-19 Cases Rise by 700%
November 21, 2022
On Friday energy prices continued their decline as demand destruction fears were stronger than supply disruption concerns. The cases of COVID in China continue to go up and the lockdown restrictions do not appear to be easing. The WSJ reported that China COVID-19 cases have risen 700% in the past two weeks.
This is a short holiday week that usually sees low volume of trade which can lead to some big price moves but because of limited trades and traders it is best to take it with a grain of salt.
Baker Hughes report that oil rigs were up 1 to a total of 623, their highest since March 2020.
US existing home sales fell by 5.9% in October 2022 from September 2022 and 28.8% versus October 2021.
Europe and India rush to fill up on Russian diesel before the export ban goes into effect. Companies are looking for Russian cargoes to load by December 5th and discharge before January 19, the grace period allowed under the new price cap and export ban. There are also stories today that say many European refiners are over supplied with crude oil as they overbought in November and December. This is causing the forward curve in both WTI and Brent to shift from backwardation, futures months lower than prompt to a contango, future months are higher than prompt. A contango structure can allow for companies to store crude oil if the price difference between the months get high enough to cover storage cost. If this contango structure continues we are likely to see prompt price continue to ease lower.