China oil de­mand plunges 20% on coro­n­avirus lock­down

Muscat Daily - - BUSINESS -

Sin­ga­pore - Chi­nese oil de­mand has dropped by about 3mn bar­rels a day, or 20 per cent of to­tal con­sump­tion, as the coro­n­avirus squeezes the econ­omy, ac­cord­ing to peo­ple with in­side knowl­edge of the coun­try’s en­ergy in­dus­try.

The drop is prob­a­bly the largest de­mand shock the oil mar­ket has suf­fered since the global fi­nan­cial cri­sis of 2008 to 2009, and the most sud­den since the Septem­ber 11 at­tacks. It could force the hand of OPEC and its al­lies, which are con­sid­er­ing an emer­gency meet­ing to cut pro­duc­tion and staunch the de­cline in prices, which are headed for the low­est close in four months.

“It is truly a black swan event for the oil mar­ket,” said John Kil­duff, a part­ner at Again Cap­i­tal LLC in New York.

Crude fu­tures fell to oneyear lows on Mon­day as traders re­acted to the mag­ni­tude of the health cri­sis in China. Brent, the global oil bench­mark, dropped 0.3 per cent to US$56.45 a bar­rel as of 11.37am in Lon­don. West Texas In­ter­me­di­ate de­clined as much as 2.2 per cent, but re­cov­ered to trade 0.3 per cent higher at US$51.71. China is the world’s largest oil im­porter, so any change in con­sump­tion has an out­size im­pact on the global en­ergy mar­ket. The coun­try con­sumes about 14mn bar­rels a day -equiv­a­lent to the com­bined needs of France, Ger­many, Italy, Spain, the UK, Ja­pan and South Korea.

Beijing has locked mil­lions of peo­ple in quar­an­tine and the New Year hol­i­day has been ex­tended.


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