Americas News
Coronavirus Panic Causes More Crude Losses As Analysts Readjust Downward Demand Forecasts
About the only good thing that can be said about Friday's crude trading in the face of the spreading coronavirus is that had not the two major benchmarks enjoyed the single best day on record in the previous session, the performance would have been all the more devastating for industry.
West Texas Intermediate fell $2.79 to settle at $22.43 per barrel, while Brent fell $1.49 to settle at $26.98 per barrel.
Giovanni Staunovo, oil analyst at UBS, tried to be even-keeled when he stated, "Positive risk sentiment and a weaker U.S. dollar are helping crude on Friday; also, comments from U.S. president Donald Trump that he might get involved in the oil [price] war at an appropriate time is supporting oil.
"My concern relates to the likelihood of more mobility restrictions around the globe, which is likely to weigh further on oil demand, hence the worst is probably not over for oil prices."
Indeed, Giovanni Serio, head of research at Vitol, theorized that "Demand destruction this year depends on how many countries follow an Italian-style lockdown.
"If you extrapolate to the rest of Europe and particularly the United States, then you can get as bearish as you like."
Reuters pointed out that demand forecasts made less than two weeks ago now seem outdated, citing the Energy Information Administration position on March 11 that demand will rise by a modest 370,000 barrels per day (bpd) in 2020, and the International Energy Agency flagging a small 90,000 bpd contraction on March 9.
By contrast, Standard Chartered on March 17 forecast average demand in 2020 to fall by 3.39 million bpd, which would be a new record, exceeding the 1980 drop of 2.71 million bpd in terms of barrels although not as a percentage of total demand.
However, entirely forgotten by media now that it has played a crucial role in causing fear to become more widespread than the virus itself is that economies also tend to rebound quickly; and as medical researchers come closer to having several promising treatments and ultimately a vaccine approved for use, experts think that rebound may occur in the third or fourth quarters of this year.
