Coronavirus Impact on Global Oil Demand Could Be Significant
February 13th, 2020
Propane stocks declined by 6.172 million barrels and this was a shock for the market. The report was a bit of a head scratcher any many market watchers are looking for something to be changed net wee or at the end of the month on the adjustment. Midwest stocks were done 794,000 barrels to a total of 15.397 million barrels, which is 727,000 more barrels than last year. The Gulf Coast stocks were down a big 4.349 million barrels putting total stocks at 53.330 million barrels which is 16.224 million more than last year. Total stocks are currently 77.273 million barrels which is 19.105 million more than last year with most of those additional barrels in the Gulf.
The DOE inventory report had crude stocks up a big 7.46 million barrels a much bigger number than the market was looking for. Crude stocks at Cushing, Ok also had a big 1.67 million barrel build. Gasoline stocks were down 100,000 barrels and distillate stocks were down 2.01 million barrels. Most traders looked at the big crude number and called this a bearish report. But the market didn’t react as such as yesterday was a big rally for energy prices especially gasoline. Also supportive to gas was the news that ExxonMobil’s Baton Rouge refinery had a fire that shut it down. I have not seen any estimates on damage and downtime. This is the fifth largest refinery in the US with a capacity of 502,500 bpd.
The IEA revised its oil demand forecast and showed a decline in Q1 of 2020 of 435,000 bpd, which is the first time since the financial crisis of 2009 that a decline has been projected. The previous forecast was up 800,000 bpd. They said the consequences of the coronavirus for global demand will be significant.
Russia is still undecided if they will agree to increasing the production cuts for the OPEC+ group of producers by the recommended 600,000 bpd from the Joint Technical Committee.