Oil prices hit by Chinese coronavirus

Audio 01:57

By: Claire Fages Follow

Oil is one of the raw materials most affected by the coronavirus. The barrel started the week at its lowest level in a year. Worried, OPEC is meeting its technical committee from this Tuesday.

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The coronavirus epidemic reaches crude prices first because it is the raw material of transport. The precautionary measures were applied very quickly, faster than during the SARS epidemic in the early 2000s. The interruption of air links in China and to China, but also the least travel by road to the New Year's Eve, as much kerosene, diesel and gas will not be consumed.

Chinese imports fell

As the world's largest buyer of oil, China has reduced its imports by 3 million barrels per day, - 20% from the usual level at this time of year, reports Bloomberg. Questioned by RFI, the design office Kayrros also noted a drop in crude oil purchases from China for two consecutive weeks, to 8.5 million barrels per day. By satellite photo, Kayrros observes at the same time that the Chinese oil stocks do not decrease, which means that the consumption of the Chinese refineries slows down.

Refinery Slows, Electricity Production Slows

Beyond transport, the Chinese economy could be affected. This is another data observed by Kayrros: electricity production is decreasing in China. All this does not bode well for the activity of the country, still largely the workshop of the world, and it aggravates the bearish feeling of the oil markets. They were worried about the abundant supply that weighed on prices. Now they are also worried about falling demand.

OPEC's concern

And they are not the only ones since OPEC, enlarged to Russia, meets its technical committee for two days in Vienna. " The exporting countries should not decide anything before the meeting of petroleum ministers, currently scheduled for June. But the fact that they bring together their technical committee is already psychologically useful communication for the oil markets , ”observes Philippe Sébille-Lopez, of Géopolia. Especially since they suggest upstream that they could again reduce the production of the cartel by 500,000 barrels per additional day, " which they had already mentioned earlier, in January. "
" The impact of the coronavirus on oil prices may already be digested by the markets , judge Pierre Terzian, of Petrostrategy, unless the epidemic worsens in other regions of China ".

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