|Day's Range||52.15 - 53.71|
(Bloomberg) -- Oil tumbled on fears China’s deadly coronavirus will crimp demand, prompting Saudi Arabia to say it was closely monitoring the situation.Futures in London and New York plunged more than 3% as the death toll and the number of infections rose, while officials extended the Lunar New Year holiday to help stem the spread of the outbreak. Goldman Sachs Group Inc. predicted that global oil demand may take a hit, but Saudi Arabia said it believes the crisis so far will have a “very limited impact” on consumption.The virus is the latest upheaval for the oil market, which has been hit with turmoil in OPEC producers from the Middle East and North Africa. The market is also dealing with plentiful global crude supply, even as the Organization of Petroleum Exporting Countries and its allies trim output to prop up prices. Investors are selling crude amid a broad withdrawal from riskier assets and fears the virus will curtail fuel consumption as travel is restricted.“This could be one of the most significant demand destruction events in history,” Phil Flynn, an analyst at Price Futures Group Inc., said by email. “The impact has to be in the hundreds of thousands of barrels of demand loss and counting. Fears of a fast spread will kill oil demand.”Brent futures lost as much as $2.01, or 3.3%, to $58.68 on the London-based ICE Futures Europe exchange and traded at $59.31 as of 10:41 a.m. Singapore time. The contract slid 6.4% last week, capping the longest run of weekly losses since June. West Texas Intermediate fell as much as $2.04, or 3.8%, to $52.15.The sell-off could gather pace as Brent approaches levels at which some U.S. shale companies have hedged their oil prices for 2020. For example, Occidental Petroleum Corp. has hedged this year in a complex deal at a price equivalent to $55 a barrel. As prices approach that level, the Wall Street banks which sold Occidental the insurance may be forced to sell to offset their exposure.See also: Viral China: Behind the Global Race to Contain a Killer BugSaudi Energy Minister Prince Abdulaziz bin Salman said the world’s largest oil exporter was closely monitoring the situation both for its impact on the Chinese economy and the oil market fundamentals. Yet, he said that the same “extreme pessimism” that’s afflicting the market also occurred in 2003 during SARS, “though it did not cause a significant reduction in oil demand”.“The current impact on global markets, including oil and other commodities, is primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on global oil demand,” the prince said in a statement.Global oil demand may slip by 260,000 barrels a day this year and could shave almost $3 from the price of a barrel of crude, Goldman Sachs said last week, using the 2003 SARS epidemic as a guide.See also: Iraq Al Ahdab Oil Field Resumes Production After Protests EndChina extended the Lunar New Year holiday until Feb. 2 from Jan. 30. There are more than 2,700 confirmed cases of infection in China so far and Canada confirmed its first case while the U.S. announced a fifth, as the virus spreads to at least 15 countries and territories.“The ultimate worst case scenario is getting priced into oil,” said Stephen Innes, chief market strategist at AxiCorp. “The move is exaggerated because there is lot of oil in the market at the moment. Fear is driving markets.”\--With assistance from Javier Blas.To contact the reporters on this story: Aaron Clark in Tokyo at email@example.com;Saket Sundria in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Serene Cheong at email@example.com, Ben Sharples, Ramsey Al-RikabiFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The outbreak and escalation of the coronavirus has raised serious oil demand concerns, driving prices down despite geopolitical risks and supply outages
(Bloomberg) -- Iraq’s Al-Ahdab oil field resumed production about a week after operations halted there due to protests by security guards amid unrest in one of OPEC’s biggest producers.Output resumed at Al Ahdab at full capacity, or 70,000 barrel a day, according to an Iraqi oil official who couldn’t be identified. The protesters left the site of the field located in the central province of Wasit after authorities accepted to meet their demand for permanent employment contracts, the official said.The security guards had blocked access to employees into the production site on January 19, prompting a halt in production at the field developed by China National Petroleum Corp.Around 600 people have died and thousands of others have been wounded in clashes between security forces and protesters since Oct. 1. Iraqis are protesting against government corruption, poor services, interferences by foreign powers and are calling for an overhaul of the ruling class. The protests led to a brief halt of the Nasiriya field and refinery in December.Iraq pumped about 4.65 million barrels a day of crude in December, putting it second behind Saudi Arabia among members of the Organization of Petroleum Exporting Countries.To contact the reporter on this story: Khalid Al-Ansary in Baghdad at firstname.lastname@example.orgTo contact the editor responsible for this story: Nayla Razzouk at email@example.comFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Oil succumbed to the coronavirus this week because its immune system was compromised already. Amid headlines about quarantined Chinese cities and dozens of potential cases showing up in the U.S., Brent crude closed on Friday at $60 and change, its lowest since Halloween. This is all the more remarkable when you consider January has seen several geopolitical shocks stretching from Libya to Iraq.Like the outbreak itself, oil’s problems began in December with a fever of its own. Relief at a sudden truce in the U.S.-China trade war sparked a rally taking oil from about $62 a barrel close to $70 by the end of that month. Speculators, in retreat for much of 2019, suddenly piled in again. Hedge funds’ net length in the major crude and product contracts surged from less than 600 million barrels-equivalent to almost 900 million between early December and early January. On a rolling four-week basis, December saw the sharpest increase in long positions in my entire data series going back to the start of 2011 (and net length increased at its fastest rate in more than two years).You’ll notice the fever began to break a little earlier this month. Friday’s report from the Commodity Futures Trading Commission showed net length dropped by 63 million barrels-equivalent, or 7%, in the two weeks after January 7.But the way the fever subsided revealed continuing vulnerability. After all, prices dropped even as the killing of Iranian military leader Qassem Soleimani threatened to unleash chaos in one of the world’s biggest oil-producing countries, Iraq, and Libya’s tensions flared up again, blocking its oil exports. And this comes mere months after the collective shrugging-off of September’s attack on Saudi Arabia’s Abqaiq oil-processing facility. Besides fever, listlessness is also the hallmark of a sick patient.So why has the oil market reacted strongly in response to coronavirus reports but not in the other direction when rockets are exploding in the Middle East?There is likely a technical factor at play. Energy economist Phil Verleger points out oil producers such as Occidental Petroleum Corp. took advantage of the speculative rally to hedge their 2020 output. You can see this in the roughly 140 million barrel-equivalent expansion of swap dealers’ net short position in Nymex light sweet crude between early December and early January, a proxy for hedging activity by producers. As oil prices decline, particularly toward such key levels as $60 in Brent and $55 in WTI, so the banks that wrote the puts sell futures to manage their own exposure — a self-reinforcing spiral similar to what appeared to happen in the oil rout that closed out 2018.Underlying this is the basic problem that has dogged the oil market for five years: excess supply and inventories relative to demand. The continuing OPEC+ cuts that got everyone excited back in 2016 are the surest sign of this chronic condition; but there are others, such as unusually subdued U.S. gasoline demand.No one can accurately quantify what impact the coronavirus outbreak will have on oil prices. Novel diseases can ultimately amount to little or spark pandemics, with much in between. And the impact on oil demand, at least in the near term, has more to do with perceptions of infectiousness and what that does to travel and regular interaction rather than fatalities per se.Oil traders are as much in the dark on the ultimate course of this as anyone. Meanwhile, on the supply side, they know there is spare capacity, a demonstrated Saudi pledge to maintain supply even if bombed and a U.S. fracking industry that is bowed but, if goaded enough price-wise, tends to produce more rather than less. In other words, the ceiling is in sharper focus than the floor right now. To contact the authors of this story: Liam Denning at firstname.lastname@example.orgMark Gongloff at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.Mark Gongloff is an editor with Bloomberg Opinion. He previously was a managing editor of Fortune.com, ran the Huffington Post's business and technology coverage, and was a columnist, reporter and editor for the Wall Street Journal.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
A combination of long-liquidation and short-selling is driving prices lower so I don’t expect smart buyers to just step in front of the downside momentum.
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To the annoyance of some shareholders, Callon Petroleum (NYSE:CPE) shares are down a considerable 31% in the last...
Based on the events over the weekend with the spreading of the coronavirus, we’re expecting to see a lower opening.
U.S. oil prices fell 7.5%, their sharpest weekly move lower since July, as the commodity was weighed down by fears that a deadly new virus spreading throughout China and other countries will hurt demand.
OPEC members are discussing a potential extension of the oil production cuts through the end of 2020, an OPEC source told Russian news agency TASS on Friday.
Oil futures ended sharply lower Friday, as worries over potential oversupply were augmented by fears the spread of the coronavirus could undercut demand for crude. West Texas Intermediate crude March delivery fell $1.40, or 2.5%, to end at $54.19 a barrel on the New York Mercantile Exchange, after hitting the lowest level for a most active contract since late October. The U.S. benchmark saw a 7.5% weekly drop, its biggest such fall since a nearly 9% drop in the week ending May 31, according to FactSet.
Crude futures remained sharply lower Friday after oil-field-services company Baker Hughes said the number of U.S. oil rigs rose by 3 from last week to 676. West Texas Intermediate crude for March delivery on the New York Mercantile Exchange was off $1.40, or 2.5%, at $54.19 a barrel in recent trade.
The S&P; 500 went back and forth during the week, showing signs of exhaustion as we are clearly a little overextended. That being said though, there are plenty of support levels underneath that I will be watching.
Crude oil markets got absolutely hammered during the week, forming an extraordinarily bearish candlestick. That being said, we are still well within the overall range that we have been in for the year and a half.
The British pound rallied again during the week, breaking above the 200 week EMA before given back quite a bit of the gains. By doing so, the market has formed a bit of a shooting star, suggesting that perhaps we may have to pull back.
The Australian dollar initially tried to rally during the week, but then reached towards the previous downtrend line. Ultimately, the market is approaching the 0.68 level is a sign of challenging support.
The lack of follow-through to the upside following Thursday’s technical bounce suggests the absence of buyers, since the move was likely fueled by profit-taking and short-covering.