According to a Freight Investor Services report, the oil markets are responding to the coronavirus outbreak as the market slumps low, triggering actions from OPEC.
The Coronavirus Effect
The coronavirus infections in China have passed 7,700 with several countries isolating citizens evacuated from Wuhan to help efforts to prevent the global spread of the epidemic while in China, the death toll has climbed to 170 people and there are cases confirmed in every single Chinese region.
- The oil markets have responded by tanking out all the recovery that had been made to levels over $60.
- We are hovering over that all important $58.50 support level which seems to be the only thing holding back the endemic pessimism gripping the marketplace.
OPEC Urgent Meeting
OPEC is considering pushing forward a meeting initially scheduled for March, according to Algeria’s energy minister, after oil prices slumped on concern that the spread of the virus would hurt oil demand.
We’ll send a free personalised congratulatory postcard to anyone able to guess what they outcome of that meeting is going to be – on second thoughts it’s so obvious maybe not.
It will be the usual floating of news before hand – extension of cuts, talking up the market, Saudi taking the lead on holding the market up etc. Oil giant Royal Dutch Shell reported a sharp fall in full-year net profit on Thursday, citing challenging macroeconomic conditions and lower oil and gas prices.
There might be a bit more pain for them before the big money starts rolling in again.
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Source: Freight Investor Services
