Coronavirus Economic Impact Expected to be Short-Term
February 20th, 2020
Crude oil and refined fuels product prices closed much higher yesterday mainly driven by US sanctions imposed on a Russian oil company, more conflicts in Libya, and a lower number of confirmed coronavirus cases in China. Brent crude oil recorded the 7th straight positive day in prices.
The API released their inventory report yesterday and it called crude oil stocks up 4.16 million barrels compared with the outlook for today for crude stocks to be up 2.5 million barrels. Cushing, Ok crude stocks were up 421,000 barrels. Gasoline stocks were down 2.7 million barrels and that compares with the outlook for today’s report to show gasoline up 435,000 barrels. Distillates stocks were down 2.6 million barrel and the outlook for today is for them to be down 1.46 million barrels.
The news has continued to be seen as constructive and the bulls continue to use that to push the market higher.
A lot of reports and stories today about a severe but quick impact from coronavirus. Again, all the news seems to be good or that is what is getting pushed forward.
S&P Global Ratings said it expected the coronavirus to deliver a “short-term blow” to economic growth in China in the first quarter, echoing findings by the IEA.
Rosneft’s Vice President, Otabek Karimov, said the company’s oil supplies to China are stable and unaffected by the coronavirus epidemic. He also stated that Venezuela was paying its debt to Rosneft on schedule.
Russia Energy Minister, Alexander Novak, said that there will not be an early OPEC+ meeting to discuss further cuts. The meeting is to stay at it scheduled time in March. He also said, ”There isn’t anything extraordinary enough to change the date…, the situation is quite uncertain and is changing rapidly.
China cut its leading rate as it continues to try and support its economy from the impact of the virus.
John Kemp of Reuters reported that Brent crude oil six-month calendar spread has strengthened to $1.10 backwardation (current prices are higher than six months out) as traders anticipate severe but short-lived downturn in consumption owing to coronavirus.