Brent Moves Above $57 as Chinese Refiners Increase Demand
By Adedapo Adesanya
Despite demand worries still affecting prices, Brent crude went above $57 per barrel on Friday as investors regained interest in trading amid the economic impact of the coronavirus, which some observers have said would be a thing of the past.
On Friday night, the Brent Crude gained 89 cents or 1.58 percent to trade at $57.23 per barrel, while the WTI crude rose by 59 cents equivalent to 1.15 percent to sell at $52.01 per barrel.
Traders comprising independent refiners went on a buying spree on Friday. For instance, Shandong Shouguang Luqing Petrochemical Company bought as many as seven cargoes from Russia, Angola and Gabon for March and April, while Sinochem Hongrun Petrochemical Company bought a shipment from Gabon, according to what Business Post gathered from Bloomberg News.
Also, the activities of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, following deliberations last week to extend oil cut up by 600,000 barrels per day to 2.3 million barrels per day till June 2020, contributed to the gains yesterday.
Even though Russia wasn’t excited in extending cuts, analysts say they might have no choice but to eventually agree to further curb production in response to the demand fears brought about by the spread of COVID-19 in China.
However, since the meeting which wrapped up last week, nothing has yet been confirmed or approved from Russia ahead of the next meeting in Vienna on March 5-6.
Latest reports from China on Friday said 121 more people had died from COVID-19, over the previous 24 hours, bringing the total number of deaths to 1,381.
The country’s National Health Commission also reported that 5,090 new confirmed cases were in mainland China, bringing the total to 63,851. The number of new cases jumped sharply on Thursday after a change in the government’s counting method.
With continuous effect of the virus on oil demand, the International Energy Agency (IEA) said that first-quarter oil demand for 2020 was set to fall compared with 2019 for the first time since the financial crisis in 2009 because of the outbreak.
According to the agency in its monthly oil market report released on Thursday, demand is now expected to fall by 435,000 barrels per day in the first quarter of 2020, down from the same period a year ago as 825,000 barrels a day will be expected in Q1.
The consequences of the new coronavirus, known now as Covid-19 by the World Health Organisation (WHO) will be significant for global oil demand, oil prices and producers, the IEA said in its report.