Lunar New Year Brings Fear of Spread of Coronavirus

On Thursday, crude prices continued the downward trend we had seen through the week based upon the news of the possible spread of the coronavirus.  The virus has prompted the suspension of public transportation in 10 Chinese cities.  Health authorities fear the infection could spread as millions of Chinese travel over the Lunar New Years holiday this weekend.

The fear to oil markets posed by the coronavirus is that the Chinese will travel less, cutting the demand for oil and products, due to the fear of the spread of infection.  It is the oil demand growth that moves prices, and China’s oil demand growth is far greater than that of the United States.  China’s oil demand has been growing at an annual rate of 5.5%, while the United States’ oil demand has been growing by 0.5%.

The EIA reported a smaller-than-expected draw for crude of 0.4 MMbbls, versus an expected draw of 1.0 MMbbls.  At Cushing, the EIA reported a 1.0 MMbbls draw.  The EIA reported distillates had a surprise draw and gasoline saw a smaller-than-expected build.

Crude is falling this morning as markets consider the spread of the coronavirus.  WTI Crude is trading down this morning at $54.50, a loss of $1.09.

Fuel is down in early trading this morning.  Diesel is trading at $1.7598, a loss of 3.2 cents.  Gasoline is trading at $1.5252, a loss of 3.5 cents.

Market Condition Report - Disclaimer
The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures or options contracts.

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