OPEC+ seems to be within a whisker of agreeing to cut output to counterbalance the effect of the coronavirus...

The coronavirus is continuing to grind down the oil market, and despite a brief pickup in prices towards the end of the week, there isn’t a quick resolution in sight. There was much hopeful talk about a vaccination that could be available soon, but the Coalition for Epidemic Preparedness Innovations which is currently working on developing the medicine splashed cold water on those hopes saying that it could take six to eight months to put a viable medical solution in place.

Nevertheless, there are signs that life in parts of China outside the worst affected area is starting to regain some normality. The government told businesses outside Hubei Province to resume operations, railway and civil aviation authorities were asked to make adjustments for passengers to sit less densely together, and even schools started making preparation to restart the semester, although on a slightly later date.

Source: Johns Hopkins CSSE

Planned OPEC cut may not be enough

OPEC+ seems to be within a whisker of agreeing to cut output by another 600,000 barrels a day to counterbalance the eroding effect of the coronavirus, but it remains to be seen if this will be enough given that China’s oil demand has dropped by 1.4m bbl/d since the outbreak started.

OPEC’s non-executive technical committee debated the effects of the virus for three days this week and eventually came up with the recommendation for a further cut on top of the existing restrictions, a proposal that has yet to be agreed on by Russia. Despite the initial “niet”, Russia is likely to agree to the cuts shortly given past experience, even if it subsequently ignores the production cut anyway. In January alone the country pumped a record 11.3 million bbl.

Country update: Libya

Since the middle of January, Libya has temporarily lost almost 75% of its production as forces loyal to eastern-based commander Khalifa Haftar blocked ports and fields in the east and south of the country. During 2019 and before the January blockade Libya had made big strides in recovering its output, doubling production to 1.097M bbl despite an ongoing conflict between Haftar, who controls the Libyan National Army, and the Tripoli-based government.  Next week should see some movement in the status quo as tribal leaders loyal to Haftar submit the list of their conditions for unblocking the oil fields to the UN next Thursday.

Some OPEC producers have been gradually increasing output to plug the gap created by Libya’s lost production, but given the weakness of the overall global demand, Saudi Arabia has maintained a very cautious stance throughout by producing about 400,000 bbl/day below its quota.



Why is it important

Tuesday Feb 11, 10.00

EC releases economic growth forecasts

A proxy for future European oil demand

Tuesday Feb 11, 13.55

US Feb 7 Redbook index

Strength of US retail demand

Tuesday Feb 11, 21.30

API weekly crude oil stocks

Last at 4.18m

Wednesday Feb 12

OPEC monthly oil report

Producer output levels

Wednesday Feb 12, 10.00

EU Dec industrial production

Down 1.5% y-o-y in Nov

Wednesday Feb 12, 15.30

EIA crude oil stocks change

Indicator of US oil demand

Thursday Feb 13, 13.30

US initial jobless claims

Last at 202,000

Friday Feb 14, 02.00

China January industrial production

First insights into effects of the coronavirus in January

Friday Feb 14, 07.00

Germany Q4 GDP

Germany could be sliding towards recession. Last 0.5%

Friday Feb 14, 10.00

EU trade balance

Car exports, oil imports of interest

Friday Feb 14, 10.00


Last at 0.1%

Friday Feb 14, 14.15

US Jan industrial production

Recent declines could have been tampered in January

Friday Feb 14, 18.00

Baker Hughes US rig count

Production trend

Friday Feb 14, 20.30

CFTC oil commitment of traders

Money managers positions

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account