47 And Counting

Oil Price traded into the $47 a barrel handle as it reports that the coronavirus hit 47 countries. Coincidence? I think not. The spread of the virus is spreading not only fear but oil demand destruction and horror thinking about potential demand destruction to come. Jet Fuel demand has taken a considerable hit, and according to the Energy Information Agency (EIA) is down 8% over a year ago. Now more flights canceled and OPEC plus Russia still thinking debating how to respond with production cuts, it is hard to make a strong case for a bottom, even though technically we should be near one.

Still no sign that Russia wants to join OPEC in a production cut. Reuter's reported that "Russia is "very satisfied" with its cooperation with Saudi Arabia and wants to continue it within OPEC and non-OPEC frameworks, as well as bilaterally, Russian Energy Minister Alexander Novak. "We are very satisfied with the cooperation with our partners, Saudi Arabia, and naturally we want to continue to cooperate not only in the framework of multilateral relations - OPEC, but also bilaterally - we have a lot of joint projects," he said. Novak added that Russia was sticking to its earlier forecast of a potential hit to global demand from the coronavirus outbreak in China and beyond, adding that estimates may change given that the flu-like virus is spreading in Europe."

There were hopes that President Trump, in his press conference, could offer assurances that the virus was under control. President Trump said the risk to Americans from the virus is "very low. He put Vice President Mike Pence in charge overseeing the coronavirus team. Trump wanted to reassure the American people that a significant outbreak in the U.S. is not a sure thing. President Trump said, "I don't think it's inevitable. It probably will. It possibly will. It could be at a very small level, or it could be at a larger level. Whatever happens, we're totally prepared," the President told reporters.

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