Global Oil Demand Shrinks, Hit by Coronavirus | Weekly News Update

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Global Oil Demand Shrinks, Hit by Coronavirus

The International Energy Agency (IEA) has updated its forecast and expects global crude oil demand to fall in the first quarter of 2020.  This would be the first quarterly drop in over a decade.  The main reason for the slowdown is the outbreak of the coronavirus.  IEA also cut its 2020 annual forecast by 365,000 barrels per day, which is a 30 percent decrease from its previous forecast.  Furthermore, the Organization of Petroleum Exporting Countries (OPEC) has also slashed its forecast by 230,000 barrels per day.

At the time this was written, West Texas Intermediate (WTI) and Brent crude oil prices have recovered slightly but remain below January 6 levels when the outbreak was first announced.  WTI is down roughly $11 per barrel or 18 percent since January 6, 2020, and Brent is still down nearly $12 per barrel or 17 percent over the same timeframe.  Wholesale diesel prices followed suit and remain down over 30¢ per gallon or 11 percent.

 

Pipeline protests cripple Canadian railways

Last week Thursday, Canadian National Railway (CN) announced it would shut down operations in eastern Canada due to blockades set up by protesters against pipeline expansion projects.  The shut down will impact a key corridor connecting western Canada to the eastern part of the country.  The railway is responsible for moving roughly 250 billion Canadian dollars—roughly $190 USD—worth of products including commodities and consumer goods.  The Teamsters warned the shutdown could cause layoffs reaching 6,000 employees.  Both the company and the teamsters have urged the federal government to intervene to resolve the situation as quickly as possible.

 

Top Energy Stories

WSJ: China Outbreak Weighs on Commodities, From Oil to Hogs

China’s coronavirus outbreak has scrambled the global trade in commodities, hitting the country’s massive appetite and challenging global supply lines set up to feed it.

Platts: Oil rebounds, but S&P Global: LNG remains bearish as market weighs coronavirus demand impacts

Global oil markets were higher for a third straight session Thursday, but LNG prices remained bearish, as the market weighed the demand implications of a steep uptick in coronavirus cases reported overnight.

WSJ: Global Oil Demand Shrinks, Hit by Coronavirus, IEA Says

Global oil demand is expected to fall in the first three months of the year—the first quarterly drop in more than a decade—according to a closely watched forecast from the International Energy Agency, which blamed a likely economic slowdown in China related to the novel coronavirus outbreak there.

 

Top Freight Transportation Stories

WSJ: Coronavirus Toll on Shipping Reaches $350 Million a Week

Diminished trade as a result of the coronavirus outbreak is costing container shipping lines $350 million a week in lost volumes, a new report says, as declining activity in China begins to take a deeper toll on maritime operations from shipyards to carriers of bulk commodities.

Seatrade Maritime News: CMA CGM teams up with Energy Observer to develop hydrogen as a fuel

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Bloomberg: Pipeline protests cripple Canadian railways, raising CEOs’ ire

Canadian National Railway Company, the country’s largest rail provider, has canceled 400 trains in the past week and said on Thursday that it will shut down its operations in Eastern Canada, possibly leading to temporary layoff s. Via Rail, which operates passenger train service across the nation, is canceling all services effective immediately.

 

Top Economic Stories

WSJ: China’s Factories Struggle to Resume Operations After Virus Shutdown

As China shuts down swaths of the country to contain a fast-spreading virus, Fabien Gaussorgues is struggling to keep running a business that makes consumer electronics for small-business customers in North America.

WSJ: U.S. Industrial Production Sputtered in January

U.S. industrial output fell in January, driven down by unseasonably warm temperatures and a halt in production at Boeing Co.

WSJ: China’s Shipping Nears a Standstill Amid Coronavirus Disruption

Shipping volumes out of China are plummeting as the impact of the coronavirus outbreak takes a deeper toll on industrial production, and ocean carriers are bracing for financial blows from the diminished output.

 

 

This weekly publication is designed to highlight relevant industry news to provide professionals in the transportation, supply chain, and energy sectors with up-to-date information in a rapidly changing marketplace. This update is purely a compilation of industry news and as such, does not necessarily reflect the opinion of Breakthrough. We do not warrant or guarantee accuracy or completeness of information. For additional information, please contact us at info@breakthroughfuel.com.

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