Good News from China
February 19th, 2020
Good news from China on the coronavirus is helping to give energy a chance to trade higher here this morning. Good news seems to bring out buyers and bad news the sellers. China reported its fewest new infections of coronavirus since January and its fewest deaths for a week. However, the World Health Organization said data suggesting the epidemic had slowed should still be viewed with caution. Chinese official reported 1,886 new cases bringing the mainland China total to 72,436. The figure of 98 new deaths marked the first time the daily toll had fallen below 100 since February 11th, bringing the overall toll to 1,886. World Health Organization Director-General, Tedros Adhanom Ghebreyesus, said Chinese data “appears to show a decline in new cases” but any apparent trend “must be interpreted very cautiously.”
Crude oil and refined fuel product prices closed mixed yesterday, with WTI crude oil prices closing flat, Brent crude oil prices rising by 0.8%, RBOB prices up by 2.0% and ULSD prices down by 1.5%.
The EIA in their monthly drilling report said they expected shale oil production form 7 major basin to only rise by 18,000 barrels per day from February to March up to a total of 9.175 million bpd. Shale oil production growth has slowed significantly over the past 2 months, which is overall supportive to WTI crude oil prices. But as we have said the impact that the coronavirus has and will have on demand is a big unknown.
The United States put sanctions on a subsidiary of Russian state oil major Rosneft. This company has been providing support to Venezuela by helping it avoid US sanctions. Russia condemned the US actions saying it was unfair competition and they would continue to work with Venezuela. The bulls are looking for any good news to jump on and keep the market moving higher. This story is positive and supportive to the market.
Also getting some attention is China’s efforts to continue to stimulate their economy as the impact from the coronavirus continues to impact their economy negatively. The hope is that this stimulus with support demand and again the bulls are jumping on this news as supportive to the market.
Also offering support is the shut down in Libya oil fields and ports from the ongoing battling factions trying to gain control that country. Estimate are that their output is down substantially from the “normal” 1.2 million bpd and that decline is offsetting a portion of the demand destruction caused by the coronavirus. Good news today is supporting the bulls.