Month in brief

• Date: 01 March 2020
• Published date: 01 March 2020
• DOI: http://doi.org/10.1111/oet.12762

THE MONTH IN BRIEF

Month in brief

The impact of the corona virus dominated sentiment in

oil markets through February, with Brent crude falling

from close to $57/bbl to just over $50/bbl, as the implica-

tions for demand became clearer.

Crude prices began the month on the slide, under

pressure from demand concerns related to the coronavi-

rus in China. ICE April Brent ended in January at

$56.62/bbl and continued to fall through the first couple

of days in February. At this point, the disease remained

largely confined to China, with the number of confirmed

cases reaching 10 000 alongside about 215 deaths. Many

airlines halted flights to China, and stock markets saw

moderate falls. Sentiment on the fourth was further

weakened by a lack of progress among OPEC and its

allies (OPEC+) over further output cuts to compensate

for the likely virus-related falls in demand. OPEC was

reportedly keen on an additional output cut of 300 to

600 000 bpd, and there were also moves to bring the next

OPEC+ meeting forward from early March.

The fifth saw an uptick as an OPEC+ deal looked

more likely, but prices then fell further over following

days, with Brent dipping to $53.27/bbl on 10 February.

There was something of a rebound for a couple of days

from 11 February, as optimism grew that the coronavi-

rus outbreak in China was slowing based on lower

new infection figures, while OPEC raised its potential

additional cut to as much as 1 mn bpd. It also became

obvious that a blockade in Libya was severely

impacting oil exports, potentially taking as much as

1 mn bpd off the market. April Brent moved up to

$55.79/bbl on the 12th, while NYMEX WTI March

climbed to $51.17/bbl.

Prices continued to strengthen through the third

week, helped by growing confidence that the outbreak

had been contained in China, and levels peaked at

$59.31/bbl on 20 Thursday. A day earlier, there had been

strong buying interest from Chinese refiners (some of

which are currently closed or at reduced runs) for April

and May deliveries, encouraged by the relatively low-

price levels. The price recovery led OPEC+ to abandon

plans to bring its scheduled March meeting forward.

The positive sentiment then abruptly reversed at the

end of the third week, with prices slipping under pressure

from a reported rift in the production control alliance

between OPEC/Saudi Arabia and Russia, alongside ren-

ewed concerns about the potential toll of the coronavirus

on energy demand, and early signs that the epidemic was

spreading beyond China. Nevertheless, both WTI and

Brent ended up on the week.

The final week of February began with a sharp adjust-

ment downwards in both oil and equity markets, follow-

ing significant outbreaks of the corona virus outside

China, which began to be widely reported at the week-

end. These included hundreds of cases and multiple

deaths in South Korea, Italy, and Iran. By the middle of

the week, it was clear that the virus had spread to at least

37 countries. In China, however, the number of new

cases reported continued to fall, suggesting the outbreak

there may be winding down. Some support came from

signs of renewed unity between Russia and OPEC, along

with confirmation that Libyan oil output had fallen to

under 150 000 bpd from 1.22 mn bpd in early January.

This left Brent prices over $8/bbl down on the week at

close to $50/bbl.

How to cite this article: Month in brief. Oil and

Energy Trends. 2020;45:6–7. https://doi.org/10.

1111/oet.12762

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