The Oil Demand Crisis | The Corona Correction | Refinitiv | Summary and Q&A

TL;DR

The oil market is suffering from a double blow of the Coronavirus outbreak and the deteriorating Saudi-Russia relationship, leading to a significant decline in demand and lower oil prices worldwide.

Key Insights

• 😀 The oil market is facing a decline in demand due to the Coronavirus outbreak and the deteriorating Saudi-Russia relationship.
• 🗺️ Reduced flights and travel have significantly impacted jet demand and other transportation fuels.
• 😘 Lower oil prices are expected to persist for a few months, affecting both European and Asian markets.
• 🦡 The lockdown periods are anticipated to be longer than expected, and tourists will be reluctant to travel even after the worst of the pandemic is over.
• 💇 Airlines are cutting capacity, and government support is necessary to prevent bankruptcies.
• 🥺 Finding a solution to the Coronavirus could lead to increased oil demand later this year.

Transcript

Welcome to the Corona Correction Series in association with Refinitiv, I'm your host, Roger Hirst. In many ways, it was oil that was the canary in the coal mine. Even U.S. equity markets were showing strength in February. Commodities, and particularly oil, where demand is driven by the real economy, continued to fall, indicating that there was a si... Read More

Questions & Answers

Q: How is the Coronavirus outbreak affecting oil demand?

The Coronavirus outbreak has significantly reduced air travel, leading to a decline in jet fuel demand. Other transportation fuels like diesel and gasoline are also impacted by reduced travel and economic activity.

Q: Are lower oil prices expected to continue for a prolonged period?

Yes, lower oil prices are expected to last for at least a few months due to the combined effects of the Coronavirus outbreak and the Saudi-Russia conflict. The duration will depend on how these situations evolve and resolve.

Q: How are European ski resorts and airlines being affected by the decline in oil demand?

European ski resorts have closed, and the outlook for the upcoming Summer season is uncertain. Airlines are cutting capacity and many are facing potential bankruptcy. Government support is expected to help the airline industry during this difficult period.

Q: Will oil demand recover if a solution to the Coronavirus is found?

If a solution to the Coronavirus is found, there is a possibility of a significant increase in oil demand later this year. However, the current outlook remains gloomy, and it is uncertain when normality will resume in the oil market.

Summary & Key Takeaways

• The oil market is experiencing a decline in demand due to the Coronavirus outbreak, with reduced flights and travel impacting jet demand as well as other transportation fuels.

• Lower oil prices are expected to last for a few months, impacting both European and Asian markets, with some impact also on the US market.

• Demand for products such as naphtha may be affected, but jet aviation fuel and transportation fuels like diesel and gasoline are most heavily impacted.