Mid-Week Review – February 12, 2020

OPEC slashes oil demand outlook for 2020 as coronavirus outbreak stifles China

OPEC downwardly revised its outlook for global oil demand growth to 0.99 million barrels per day (bpd) in 2020. That’s down by 0.23 million bpd from the previous month’s estimate. The amended forecast is likely to reinforce the case for OPEC and allied non-OPEC producers, including Russia, to impose additional output cuts sooner rather than later.

Oil Climbs Back Above $50 Amid Signs Asia Virus Spread Is Easing

U.S. futures climbed 1.4% in a second daily gain, having lost about 20% during the preceding month amid fears the disease would slash fuel consumption in China. The latest data from the country showed a drop in suspected infections on the mainland and the number of cases in the virus’s epicenter, Hubei province, at the lowest level this month. “It seems the market thinks the worst is over, though time will tell.”

Asian Buyers Taking Less Saudi Oil on Demand Hit From Virus

At least four Asian oil refiners will take delivery of less Saudi Arabian crude than planned in March as the virus dents demand for fuel and creates a glut of alternative supplies, according to people with knowledge of the companies’ imports. The companies, which include three Chinese buyers, asked for lower volumes as part of their long-term supply contracts with Saudi Aramco, according to the people, who asked not to be identified due to company policy.

India taking up the slack as China cancels oil deliveries

Distressed oil supplies are being offered to India as the spread of the coronavirus crimps fuel consumption across China, prompting requests for cargo deferrals and cancellations by Asia’s no. 1 importer. The shipments, originally meant for Chinese refiners, were being shown at low prices, potentially yielding up to 15% more returns when processed.