Coronavirus Fears Rise as Virus Spreads
February 24, 2020
The comments are pretty easy and straight forward this morning. Cases of coronavirus have spread, and the fears of a global pandemic are rising as new locations outside of China report cases. Of course, this news has energy markets selling off as trading opened Sunday night and are down currently as a write $0.06 on ULSD and RBOB NYMEX futures and WTI crude oil futures are down over $2.00 dollars.
The news related to the virus will be the news of the day and the impact of that is already seen in the markets and it will just be a matter of the reports on how far the virus has spread and how much economic fallout there will be. Reports have given some indications that South Korea is shutting down some airports and air travel which is not a positive for economic activity.
Fear has caused investor to seek safety and moving into safe havens like the US Dollar. It appears that gold is attracting buyers as well.
“We are especially concerned about the rapid increase in cases in … Iran, Italy and the Republic of Korea,” WHO head Tedros Adhanom Ghebreyesus told a news conference in Sweden via video link. This according to a Reuters report.
China biggest steel producer, China Baowu Steel Group, said they expect output to fall 5% in the first quarter of 2020. The reason they give is the coronavirus.
US producers added 1 oil rigs in this week’s Baker Hughes rig count report. The US total is not at 679 rigs down 174 rigs for the same reporting week last year.
Saudi Arabia’s Energy Minister, Price Abdulaziz bin Salman, described as “nonsense” a media report that Saudi Arabia is considering a break from the OPEC+ alliance with Russia. His comments followed the Wall Street Journal reporting that Saudi Arabia was considering a breakaway from the OPEC+ alliance as China’s coronavirus outbreak contributes to a fall in global oil demand. The Journal reported that Saudi Arabia, Kuwait and the UAE plan to hold talks this week to discuss a possible joint output cut of as much as 300,000 bpd by the three oil producers alone.