MALCOM LUMUMBA
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- Jul 26, 2012
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The price of crude has fallen this week as the outbreak has worsened:
January 23, 2020 by David Sheppard
When people are scared they stop moving.
That is the pithy explanation from one energy trader as to why oil prices have been knocked by the outbreak of coronavirus in China.
With the city of Wuhan quarantined and panic growing as the virus spreads, travel — and with it, demand for oil — is expected to decline as fewer people take to the roads, tracks or sky.
Brent crude has dropped almost 6 per cent this week to $62 a barrel, its lowest since early December. Most traders are pointing to the coronavirus as the cause of the sell-off.
Olivier Jakob at consultancy Petromatrix goes as far as to argue that, for energy markets, the outbreak reaches the definition of a “black swan” event — highly improbable and extremely difficult to predict.
Traders, after all, should always be on guard for supply disruptions such as Iranian threats to the Strait of Hormuz or the loss of exports from Libya. But a new virus with the potential to hammer travel plans in China, the world’s largest oil importer, is harder to see coming.
Traders may not yet grasp the full impact. But for oil bulls already wavering in their conviction after the market failed to rally on events in Iran and Libya, it is safer to sell now and worry about the final toll later.
Source: The Financial Times
January 23, 2020 by David Sheppard
When people are scared they stop moving.
That is the pithy explanation from one energy trader as to why oil prices have been knocked by the outbreak of coronavirus in China.
With the city of Wuhan quarantined and panic growing as the virus spreads, travel — and with it, demand for oil — is expected to decline as fewer people take to the roads, tracks or sky.
Brent crude has dropped almost 6 per cent this week to $62 a barrel, its lowest since early December. Most traders are pointing to the coronavirus as the cause of the sell-off.
Olivier Jakob at consultancy Petromatrix goes as far as to argue that, for energy markets, the outbreak reaches the definition of a “black swan” event — highly improbable and extremely difficult to predict.
Traders, after all, should always be on guard for supply disruptions such as Iranian threats to the Strait of Hormuz or the loss of exports from Libya. But a new virus with the potential to hammer travel plans in China, the world’s largest oil importer, is harder to see coming.
Traders may not yet grasp the full impact. But for oil bulls already wavering in their conviction after the market failed to rally on events in Iran and Libya, it is safer to sell now and worry about the final toll later.
Source: The Financial Times
