Archives of “February 2020” month

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Crude oil inventories for the current week 7.459M vs 3.200M estimate

  
Analysis, Crude

Department of Energy weekly inventory data

  • Crude oil 7.459M vs 3.2M estimate. The private data came in stronger at 6.0M last night
  • Cushing OK crude inventory 1.668K versus 1.068K last week
  • gasoline inventories -0.095M vs 0.650M estimate.  Private data came in at 1.1M
  • distillates inventory -2.013M vs -0.75M estimate.  Private data came in at -2.3M.
  • Refinery utilization 0.6% versus -0.4% estimate
  • crude oil implied demand 18912 versus 19036 last week
  • gasoline implied demand 9343.6 versus 9918.9 last week
  • distillates implied demand 5226.6 versus 5386.0 last week
The price of crude oil has dipped a little but still remains up $1.50 or 2.96% at $51.42

OPEC cuts Q1 oil demand growth estimate by 440k bpd on coronavirus outbreak

  
Analysis, Crude
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OPEC releases its latest report on the oil market

OPEC
  • 2020 oil demand growth outlook cut by 230k bpd to 0.99 mil bpd
  • Coronavirus outbreak adds to uncertainties for oil market this year
  • The situation needs continuous monitoring
  • To face oil surplus of 570k bpd in Q2
The downward revisions are not surprising as they don’t just see the virus having an impact on the oil market in Q1, but also for larger portions of the year.
This is in part why they are trying to push forward with the additional output cuts but so far we are still waiting on a response from Russia regarding the latest proposal.
The thing about Russia is that, they always play hard ball but eventually cave when it comes to OPEC+ executing new output cuts. However, that doesn’t mean they will necessarily contribute and the bulk of the responsibility will fall on Saudi Arabia instead.

China said to stagger reopening of schools in order to limit coronavirus transmission

  
  Analysis
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Reuters reports, citing a government official on the matter

No firm date is being given on the matter but earlier in the month, China has said that students will only return to school next month.

It makes sense to split the reopening into batches but if anything else, it just goes to show that it will take more time before China returns back to normality again.

Chinese equities make it seven in a row in another solid day of gains

  
Analysis, Global Indices

The CSI 300 index has more or less filled the gap lower from the reopen last Monday after the Chinese New Year break

The CSI 300 index has more or less filled the gap lower from the reopen last Monday after the Chinese New Year break

SHCOMP
Chinese equities have now posted seven consecutive days of gains after the restart last Monday, with the CSI 300 and Shanghai Composite indices closing up by 0.8% and 0.9% respectively in trading today.
Notably, the former has more or less filled the gap lower from the sharp drop last Monday with the latter not far away from doing the same. Just give it a few more days.
Virus? What virus?
PBOC

The factors influencing oil right now

  
Analysis, Crude

Understanding the factors influencing oil

Understanding the factors influencing oil

Yesterday, I was speaking on CNBC Arabia about the factors influencing oil at the moment. Oil has been on a steady fall recently on demand concerns, but there are a number of factors influencing oil that it is good to be aware of. Here are five of the largest factors, so that you can get a handle on oil in a hurry.

  1. The first issue with oil is that the market is, or rather, can be easily oversupplied. OPEC+ have helped keep oil markets price supported through 2019 by agreeing to production cuts
  2. OPEC+ is waiting on Russia to see if they agree to the proposed 600K production cuts. Russia needs US crude to be at around $40 to balance their books, so they are not overly alarmed at current US crude prices around $50. However, Saudi need oil closer to the $80 mark, so they are incentivised to cut production. In fact production levels for January have been at historic low levels from OPEC suppliers
  3. Libya. The shutdown of ports in the East of Libya have really hit supply. Linya is producing around 180K barrels per day vs a normal production level of 1.2 million barrels per day. So, watch out. The Libyan crisis is currently supporting oil prices, so if the ports suddenly open then oil will fall sharply as they factor in the large inflows.
  4. Coronavirus demand issues. The longer and worse the coronavirus outbreak gets, the worse this is for oil prices. China is the world’s largest importer of oil at around 11 million barrels per day. The analysis that I have been reading puts China oil demand falling between 1-3 million barrels per day. So, that could be around a 20% fall in Chinese oil demand, possibly slightly more.
  5. The IEA and OPEC oil reports are both out this week. It will be interesting to see how they project oil demand being impacted by the coronavirus, so watch out for some potential oil wobbles as those headlines come out.

Ok folks, check the headlines as they come out, so that you can weigh them up against these factors. Trading oil is really like a puzzle at the moment, so just make sure you know how each piece is lining up before making your moves.

China GDP growth – S&P estimates coronavirus cut 0.7 % from year

  
Analysis, Economy

Ratings agency S&P on the virus impact on economic growth in China in 2020

The firm estimates coronavirus will lower China’s GDP growth by 0.7% to to 5.0% this year with a peak effect in Q1

  • expect a rebound in GDP to begin in Q3, all lost output recovered by the end of 2021

A subtraction of 0.3% is their estimate for the impact on global GDP growth in 2020

More:

  • New coronavirus a “high” risk to global credit conditions in Asia-Pacific and more particularly China
  • an “elevated” risk for rest of the world given lower infection and fatality rates outside China
  • speed and spread of coronavirus in past two months poses an emergent risk to global economy and credit
  • economic hit from coronavirus (including travel restrictions) to be felt most keenly in sectors exposed to Chinese household-related spending
  • expect a lag in lifting travel restrictions, return of more normal behavior by Chinese consumers, firms and to a lesser extent, Asia-Pacific

Ratings agency S&P on the virus impact on economic growth in China in 2020

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