Hi to all,
Here’s what I have for this week’s price changes, but with a warning: AS MARKETS HAVE BEEN EXTREMELY VOLATILE, I CAN’T ATTEST TO THEIR ACCURACY.
*Heating and stove oils show a drop of 5.6 cents a litre.
*Diesel fuel shows a drop of 5.8 cents a litre, and...
*Gasoline shows a drop of 7.1 cents a litre.
Market highlights
Corona virus doubts play hard in the markets
Markets showed extreme volatility over the regulatory period with wild swings through the week, working spot prices from extreme lows, only to show signs of price recovery as markets recovered again.
The extreme volatility has played into everything from spot prices for refined commodities to everyday reliables like gold.
Markets for refined product are showing that there is a projected drop in demand with the onset of Corona that has become a factor now in pricing. Two weeks ago, there was some question as to how Corona would affect prices, especially knowing that demand would slip there. While I predicted a drop in prices, it took some time to take hold. And oil and refined products aren’t out of the woods yet as world economic worries also hit the markets hard as a result of Corona concerns.
China demand slips again
While demand for refined products remains down about 35 percent, overall Chinese oil demand has dropped by 3.5 million barrels a day, a drop of 15 percent that has to go somewhere. While Chinese demand falters, that crude has to somewhere, and that’s also part of the problem.
However, that doesn’t necessarily mean that China is not buying oil while Corona reigns. Word is that they have been buying at bargain prices in the hope of a turn-around as they move away from the Corona virus several months down the road. Demand may be down, but they’re still buying-for now.
OPEC+ responds?
OPEC and other oil producing nation will meet again March 5 and 6th to discuss the potential of production cuts. Russia is said to be thinking it over, but Vladimir Putin is on record as stating that “Russia is happy with prices at present levels.”
That puts OPEC into a corner if Russia holds back as OPEC could face the potential of upwards of a million barrel per day cut to try and support prices with Russia’s help.
And while they discuss cuts, OPEC has to realise that it may be in a no win situation as Corona virus cuts demand to everything from manufacturing to travel and shipping and could pound markets for months. While they struggle with that, they also face the prospect of a build in world supplies of crude, a two-fold issue.
Prospects of a cut ran through the markets the past few days that initially helped support oil prices, giving oil and refined commodities a modest boost. 600,000 barrels a day seems to be the number that has been kicking around the markets the last couple of days.
Due this week:
OPEC meets March 5-6th
US EIA inventories: Wednesday noon
That’s it for this week!
Regards,
George Murphy
Twitter @GeorgeMurphyOil
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