Coronavirus: OPEC-Russia consider emergency meeting to cut supply in response to anemic Chinese demand
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Crude oil prices continued to fall Monday, following news that the coronavirus outbreak continues to spread and China’s economy continues to falter. An influential news report from Bloomberg suggested Chinese oil demand is plunging.
“One of the things that hit the market this morning was the report that Chinese demand may be down as much as three million barrels of oil per day,” Ellen Wald, energy analyst and president of Transversal Consulting, said.
If true, that would compromise a huge and sudden dropoff in Chinese oil demand. As crude prices fell — to their lowest levels in a year — word came that the oil supply organization known as OPEC Plus would hold an emergency meeting as early as next week and cut supply by as much one million barrels per day. The OPEC Plus group includes Saudi Arabia and Russia, two of the world’s largest oil producers.
“Normally you would hear news of a million barrel per day cut and oil prices would go up,” Wald said.
But prices continued down. Nervous traders are selling oil contracts first and asking questions later, said Mikkal Herberg, energy research director at the National Bureau of Asian Research.
“Chinese oil demand statistics are a little fuzzy,” Herberg said, “much more opaque than, say, the U.S. market or the European. Where this virus is evolving so quickly, we’re all, in a lot of ways, in the dark.”
When the official data do come out, markets may calm down a bit, yet even then there will be a big question on traders’ minds: how long the Chinese slowdown will last.
“I think it’s that part which is right now fraying the most nerves on the market,” Roger Diwan, energy analyst and vice president of IHS Markit, said. “We don’t know if it’s another week, or another four weeks or six weeks.”
COVID-19 Economy FAQs
What’s the latest on the extra COVID-19 unemployment benefits?
As of now, those $600-a-week payments will stop at the end of July. For many, unemployment payments have been a lifeline, but one that is about to end, if nothing changes. The debate over whether or not to extend these benefits continues among lawmakers.
With a spike in the number of COVID-19 cases, are restaurants and bars shutting back down?
The latest jobs report shows that 4.8 million Americans went back to work in June. More than 30% of those job gains were from bars and restaurants. But those industries are in trouble again. For example, because of the steep rise in COVID-19 cases in Texas, Gov. Greg Abbott, a Republican, increased restrictions on restaurant capacities and closed bars. It’s created a logistical nightmare.
Which businesses got Paycheck Protection Program loans?
The numbers are in — well, at least in part. The federal government has released the names of companies that received loans of $150,000 or more through the Paycheck Protection Program.
Some of the companies people are surprised got loans include Kanye West’s fashion line, Yeezy, TGI Fridays and P.F. Chang’s. The companies you might not recognize, particularly some smaller businesses, were able to hire back staff or partially reopen thanks to the loans.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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