• ITVI.USA
    15,530.580
    61.700
    0.4%
  • OTRI.USA
    24.320
    -0.110
    -0.5%
  • OTVI.USA
    15,484.110
    63.600
    0.4%
  • TLT.USA
    2.700
    -0.010
    -0.4%
  • TSTOPVRPM.ATLPHL
    2.500
    -0.050
    -2%
  • TSTOPVRPM.CHIATL
    3.080
    0.050
    1.7%
  • TSTOPVRPM.DALLAX
    1.370
    -0.080
    -5.5%
  • TSTOPVRPM.LAXDAL
    2.950
    0.040
    1.4%
  • TSTOPVRPM.PHLCHI
    1.690
    -0.010
    -0.6%
  • TSTOPVRPM.LAXSEA
    3.130
    0.110
    3.6%
  • WAIT.USA
    120.000
    0.000
    0%
  • ITVI.USA
    15,530.580
    61.700
    0.4%
  • OTRI.USA
    24.320
    -0.110
    -0.5%
  • OTVI.USA
    15,484.110
    63.600
    0.4%
  • TLT.USA
    2.700
    -0.010
    -0.4%
  • TSTOPVRPM.ATLPHL
    2.500
    -0.050
    -2%
  • TSTOPVRPM.CHIATL
    3.080
    0.050
    1.7%
  • TSTOPVRPM.DALLAX
    1.370
    -0.080
    -5.5%
  • TSTOPVRPM.LAXDAL
    2.950
    0.040
    1.4%
  • TSTOPVRPM.PHLCHI
    1.690
    -0.010
    -0.6%
  • TSTOPVRPM.LAXSEA
    3.130
    0.110
    3.6%
  • WAIT.USA
    120.000
    0.000
    0%
Asia-PacificBusinessEnergyInternationalNews

Slowing Chinese demand due to coronavirus hits oil prices

Crude oil prices are seeing sharp declines to start the week as concerns mount about weaker demand in China due to the coronavirus. The unfolding crisis in the world’s second-biggest economy has one major investment bank seeing the potential for a further 13% price drop in the coming months.

Brent crude oil, the benchmark for world oil prices, saw its biggest single-day percentage drop since September, falling over 4%, in intraday trading on the Intercontinental Exchange. Prices for April delivery fell as much as $2.35 per barrel to a low of $54.27 before recovering to around $54.94 by mid-afternoon.

The spread of the coronavirus and its impact on China, the second-largest global consumer of oil, is the main culprit for the move. China consumed 13.6 million barrels per day of crude oil last year, compared with the U.S.’s 20.5 million.

While U.S. demand stayed largely flat last year, China’s demand rose 630,000 barrels per day, according to the International Energy Agency (IEA), accounting for nearly two-thirds of global oil demand growth in 2019.

This year, the IEA is forecasting an approximately 440,000-barrel-per-day increase in China’s demand.

China is also the world’s biggest oil importer, bringing in nearly 10 million barrels per day of crude, making it one of the most important drivers of the global oil trade. 

But with much of the country now on an extended holiday as a way to limit the spread of the coronavirus, demand is likely to plummet.

Oil analysts at Citigroup cut their first-quarter outlook for Brent crude oil from $69 per barrel to $54 due to the lower demand. It said Brent crude prices could fall to $47.

West Texas Intermediate, the U.S. benchmark, saw a slightly smaller drop of 3% intraday in trading on the CME. Prices for March delivery fell to a low of $49.92 per barrel but have since picked up to $50.50.

China has been a major customer for U.S. crude oil, bringing in an average of 230,000 barrels per day in 2018. But since the start of the trade war, those exports have dropped to 131,000 barrels per day.

Middle East suppliers are the most exposed to China’s demand with Saudi Arabia shipping boosting sales to China 500,000 barrels per day last year. The Organization of Petroleum Exporting Countries is reported to be meeting over the next two days to formulate potential output cuts in response to weaker Chinese demand. 

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Michael Angell, Bulk and Intermodal Editor

Michael Angell covers maritime, intermodal and related topics for FreightWaves. His interest in transportation stretches back several generations. One great-grandfather was a dray horseman along the New York waterfront and another was a railway engineer in Texas. More recently, Michael has written about the shipping industry for TradeWinds, energy markets for Oil Price Information Service, and general business topics for FactSet Mergerstat and Investor's Business Daily. When he is not stuck in the office, he enjoys tours of ports, terminals, and railyards.

3 Comments

  1. “Cryptic Crypto,’ said to CRASH says The Wolf of Wall Street,

    Mr. Omar Abdulla…??

    by Naazia Hoosein

    (12 March 2020—Sky News) The Wolf of Wall Street, Mr. Omar Abdulla

    liaised with London bosses this afternoon on his analysis of the current

    stock markets, the forex industry and where investors are queuing to,

    come next quarter.

    “Realistic expectations could see all markets crash, even though China has

    said they will inject stimulus into the economy amid the Corona Virus.’

    he was quoted as saying.

    “Idealistic approaches to the global economy could see the

    world slip into recession,

    if the Covid 19 virus is not contained.’ shouted a New Hampshire

    resident.

    Local economist for Sunday World, Mz. Natasha Pillay routed that

    the first world countries

    were starting to feel the pinch of China’s recent losses, and more

    is yet to come.

    “The impact and transact of the Corona Virus has seen China lose

    billions of dollars,

    and thus, subtracting major losses to the global economy. We can

    expect major interest

    rate cuts by the major banks and reduction in taxes in Corona Virus

    infected areas.’

    Meanwhile, The World Health Organization has said that

    Corona Virus riddled countries including

    China, South Korea, Italy and Iran should put their

    countries on high-alert.

    ‘These countries should lock down their borders to a n y

    tourists visiting their country.’

    The Omar Abdulla Group which owns shares into LinkedIn SA,

    Instagram SA, Bitcoin SA and

    Forex SA said on their website that they will be selling

    major currencies

    and buying shares

    Into Gold and Silver.

    “We expect these shares to rise as fear in the market is

    still at it’s peak.’

    Other economists who spoke to South Africa Today, added that

    South Africa was still a good

    Investment as companies including, Vodacom, MTN, Tiger Brands,

    Footprints Filmworks, Naspers,

    and other Johannesburg Stock Exchange shares to rise.

    “With the market expecting an interest rate drop we could see shares

    appreciate, as more confidence looms with the election of

    President Ramaphosa.’

    Concluding his remarks to The Saturday Star, Mr. Omar Abdulla packed

    that he was adamant that third world country shares including

    South Africa, Namibia, Zimbabwe, Congo, Egypt, Morocco, Tunisa,

    Greece, and Spain would appreciate and expects first

    world currency markets to crash.

    “I would sell the ever unpopular Chinese Bitcoin, and buy into third

    world currencies.’ he ended.

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