Oil traded down notably today, plumbing 7-week lows on concerns that the deadly coronavirus that’s spreading from China will crimp energy demand in a market already awash with supplies.
The oil-price decline “is a manifestation of worries about global oil demand,” said Stewart Glickman, an analyst at CFRA Research.
And tonight's inventory data could well exacerbate that concern.
Crude +1.57mm (-1.0mm exp)
Gasoline +4.5mm (+3.3mm exp)
Distillates +3.5mm (+1.6mm exp)
Despite last week's huge product builds, analysts continue to expect more increases in inventories and they did. Crude stocks rose 1.57mm barrels against the 1mm draw expected...
The 3% drop today is somewhat ironic since it perfectly matches Goldman's estimate overnight at the impact the virus would have on price...
Goldman estimate that global oil demand may slip by 260,000 barrels a day this year as a result of the respiratory virus. If the 2003 SARS epidemic is any guide, this new outbreak could shave almost $3 from the price of a barrel of crude, the bank said.
“We could see weaker Chinese oil demand over the next several weeks or even longer,” said Leo Mariani, energy analyst at KeyBanc Capital Markets Inc.
“Going into the Chinese New Year, we tend to see outside travel throughout China and there’s big concerns about a demand shock.”
WTI hovered around $56.60 (lows of the day) ahead of the API data and extended losses as the print hit...