Virus scare pandemic that we have all worried about. Fear is beyond reason and it is reasonable to be fearful. Concerns of the virus spreading around the globe and fears of more oil demand destruction as cities are shut down. Vox reports that as of Sunday, there were 78,000 cases of Covid-19 in at least 29 countries, including surging case tolls in Italy, Iran, and South Korea, as well as an ongoing outbreak on a cruise ship off Japan.

For oil, the fear is we will see more demand destruction and turn a vert tight global oil market into an oversupplied market. The oil market is pricing in the risk of a global slowdown as the virus spreads. We can give historical contexts to these types of events and in the big picture demand shocks should be bought not sold, yet try telling the market that

Reports that the Virus is creating tensions between Saudi Arabia and Russia. The wall street Journal reported that the Saudis were considering breaking up the OPEC arrangement with Russia though Saudi Arabia denies it.

In the meantime product supply in the U.S. should fall again this week. Look for crude to fall by 2 million barrels and gas to fall by three and distillates by 3 million barrels. Bloomberg reported that Money managers’ WTI net-long position, or the difference between bullish and bearish bets, dropped 22% to 95,536 contracts, the lowest since October, according to data released Friday by the U.S. Commodity Futures Trading Commission. Long-only wagers fell 6.7%.

Nat gas is not phased.EBW Analytics says that in the natural gas market, the March contract finally broke through resistance last Thursday morning after EIA reported a much larger-than-expected 151 Bcf withdrawal—but quickly reversed course after resistance held twice at $2.025/MMBtu, forming a bearish double top. Since then, weather forecasts for the current 10-15-day window have trended significantly milder. While the loss in natural gas demand has been modest, if this trend continues, NYMEX futures could lose significant ground this week—with only a few weeks left in the withdrawal season.