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Markets Continue to Drop as Viral Death Toll Grows
January 28th, 2020
The energy market moved lower for the 5th straight day to a 3-month low as the death toll grows and the spread of the China’s deadly coronavirus increased over the weekend. This situation is increasing the fears of much lower fuel demand due to less travel and possibly more quarantines. This is the event front and center that is impacting the energy markets and will continue to until there is some sense of containment or a solution. Fear will drive the markets to get overdone, but it doesn’t appear we are there just yet.
OPEC members are doing what they can to help stave off the fear pushing prices lower. Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman said he was confident the Chinese government and international community could contain the spread of the virus and fully eradicate it. He said the current impact on the global markets, was primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on the global oil demand. Algeria’s Energy Minister and current OPEC President, Mohamed Arkab, referring to the coronavirus outbreak, said the impact on the outlook for global oil demand would be small. The UAE’s Minister of Energy, Suhail al-Mazrouei, said the oil market should not overact to the possible impact of an outbreak of the coronavirus in China on demand. He said he was confident in the ability of China and the international community to bring the current outbreak under control. He also stated the OPEC+ will meet again in March to discuss all options to ensure a balanced oil market He said the UAE’s compliance with OPEC oil output cuts in December exceeded 100%.
Analysts have compared the recent coronavirus to the SARS epidemic in 2003. SAPS reduced China’s GDP by around 1% but in 2003 China’s GDP was only 4% of the global total. China’s economy has significantly advanced since 2003 and is closer to 5.5% of the global total GDP. S&P Global is predicting an oil demand drop of about 200,000 bpd over the next few months. But many say because of China’s growth mentioned above that this estimate may be low and the number many be closer to 700,000 to 800,000 bpd. There are also estimates that this situation could impact the global oil demand growth forecast by roughly half.
Markets Continue to Drop as Viral Death Toll Grows
January 28th, 2020
The energy market moved lower for the 5th straight day to a 3-month low as the death toll grows and the spread of the China’s deadly coronavirus increased over the weekend. This situation is increasing the fears of much lower fuel demand due to less travel and possibly more quarantines. This is the event front and center that is impacting the energy markets and will continue to until there is some sense of containment or a solution. Fear will drive the markets to get overdone, but it doesn’t appear we are there just yet.
OPEC members are doing what they can to help stave off the fear pushing prices lower. Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman said he was confident the Chinese government and international community could contain the spread of the virus and fully eradicate it. He said the current impact on the global markets, was primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on the global oil demand. Algeria’s Energy Minister and current OPEC President, Mohamed Arkab, referring to the coronavirus outbreak, said the impact on the outlook for global oil demand would be small. The UAE’s Minister of Energy, Suhail al-Mazrouei, said the oil market should not overact to the possible impact of an outbreak of the coronavirus in China on demand. He said he was confident in the ability of China and the international community to bring the current outbreak under control. He also stated the OPEC+ will meet again in March to discuss all options to ensure a balanced oil market He said the UAE’s compliance with OPEC oil output cuts in December exceeded 100%.
Analysts have compared the recent coronavirus to the SARS epidemic in 2003. SAPS reduced China’s GDP by around 1% but in 2003 China’s GDP was only 4% of the global total. China’s economy has significantly advanced since 2003 and is closer to 5.5% of the global total GDP. S&P Global is predicting an oil demand drop of about 200,000 bpd over the next few months. But many say because of China’s growth mentioned above that this estimate may be low and the number many be closer to 700,000 to 800,000 bpd. There are also estimates that this situation could impact the global oil demand growth forecast by roughly half.