Coronavirus Infections Pass SARS Outbreak
February 3rd, 2020
The Baker Hughes Rig Count showed US crude oil rigs down to a total of 675 rigs. Last year at this time there were 847 rigs, so rigs are 172 lower. In Canada rigs were up 3 putting total rigs at 157 , two less than last year.
The coronavirus is now bigger than SARS but not as deadly as the number or chases is not up to thousands across the globe.
The Chinese markets opened again after the break for the Lunar New Year and the selling hit fast and hard at stocks were off 8% and the commodities markets were also very active. China central bank did step in and took action to lessen the impact.
According to Reuters survey, oil prices will remain supported near current levels this year as persistent geo-political risk and OPEC-led output cuts help offset increasing supply from other producers. Brent prices are expected to average $63.48 per barrel in 2020, compared with an average of $63.76 per barrel so far this year and last month’s forecast of $63.07 per barrel. The 2020 outlook for WTI crude oil increased to $58.22 per barrel from December’s $27.70 per barrel forecast.
The EIA reported that US crude production increased over a million bpd in the first eleven months of 2019. It also reported the US gasoline demand was 10.2 million bpd in November, while distillate demand was 5.2 million in November. US crude oil shipments via rail in November fell by 47,000 b pd on the month to 630,000 bpd.
China’s imports from the US were nearly halved in 2019 to 6.35 million tons, with no December imports, due to the US-Sino trade war. However, China is expected to increase tis US oil imports in 2020 after pledging to buy at least $52.4 billion of US energy products over the next two years as part of a Phase 2 trade deal.
Coronavirus is still the biggest news that traders are watching as the impact to energy demand is already being seen but the questions remain of how bad things might get.