According to research being used by OPEC, the demand for oil could be cut by more than 200,000 barrels per day (b/d) this year if the outbreak of the coronavirus were to last longer than six months. The modelling shows that the only way to prevent the build-up of inventory, and thus a price drop, is to extend the current cuts in production until the end of 2020. The report, prepared by OPEC's research division, indicates that demand could be cut by 130,000 b/d this year if the virus lasts six months, and over 200,000 b/d if it carried on longer. The base case for OPEC as to the effects of the virus, if it was to be contained within six months, plus the ending of the current production cuts at the end of March, shows supply surplus of 400,000 b/d in the first quarter of this year, 2.2m b/d for the second quarter. For the year as a whole, if the virus has a ‘moderate’ effect, they predict a supply surplus of 800,000.
The oil giant BP expects global oil demand to be reduced by up to 500,000 b/d in early 2020 due to the virus, however, remained upbeat about improving economic sentiment, thus supporting the oil market later in the year. BP believes refiners in China, the world's largest oil importer, will reduce both crude imports and throughput as the outbreak saps consumption, along with the slowdown in industrial activities, manufacturing and transportation. Brian Gilvary, BP’s chief financial officer, told an audience at the company’s quarterly earnings call ‘There is no question that coronavirus will impact demand this year’ adding ‘We are currently seeing around 300,000-500,000 b/d impact on demand growth and we are looking at 1.2 million b/d (demand growth for 2020) coming into the year, the question will be whether OPEC balances or not’.
And for those of you that think sleep is overrated and would prefer to lie awake worrying about whether you could double your net worth or be destitute by sunrise you may want to look at Tesla, the maker of electric vehicles. The stock has rallied 245% since October last year, is up 112% year-to-date, with 36% of that coming in the last 2 days. In the US yesterday the stock closed at USD887 +USD107 (a mere 14%). The high on the day was USD968. Bitcoin on wheels as someone put it.