WTI off the best prices of the day following EIA lowered forecasts
- WTI prices stabilising on hope of a bounce-back in demand.
- China’s National Health Commission said the number of new, confirmed coronavirus cases fell to 2,478 from 3,062 a day earlier,
- Energy Information Administration lowered its 2020 forecasts for West Texas Intermediate and Brent crude prices.
The price of a barrel of a oil is trading 0.36% higher in Wes Texas Intermediate crude, having travelled from a low of $49.56 to a high of $50.68 following news from China’s National Health Commission on Tuesday saying the number of new, confirmed coronavirus cases actually fell.
Coronavirus headlines improving risk appetite
On Tuesday, China’s National Health Commission said the number of new, confirmed coronavirus cases fell to 2,478 from 3,062 a day earlier, bringing the total to 42,638 on the mainland, including some of whom have since recovered and been released from treatment. Such news has lifted risk appetite and sentiment in global financial and commodity markets (copper +0.97%, CRB index +0.44% time of writing) as it is signifying that the Chinese are making progress in combatting and containing the virus.
This news has enabled prices in oil to recoup a small portion of the losses that sent prices to their lowest finish in more than a year a day earlier. However, given the lack of macro indicators to gauge the impact of the coronavirus outbreak on China’s real economy and how that is going to affect the outlook for the year and years ahead. While there is some relief in the headlines this week, there is still a lot that markets do not know and sentiment can flip at the drop of one negative headline.
What we do know from analysts at Standard Chartered Bank (China) Limited, is:
- Big data shows only 30% of migrant workers have returned after the holidays amid coronavirus fears.
- Very few people are out on the streets; business is unlikely to return to normal until late February.
- Manufacturing sector faces a longer delay in operations; energy producers are less affected.
- Consumption hit hard, though online sales slowed for shorter period; production activity has stalled.
Meanwhile, prices, however, ended off the day's best levels after the Energy Information Administration lowered its 2020 forecasts for West Texas Intermediate and Brent crude prices. March WTI added 37 cents, or nearly 0.8%, to settle at $49.94 barrel on the New York Mercantile Exchange.