United States and Chinese trade relations appear to have hit a new low after White House trade adviser Peter Navarro said that the trade deal was “over” on Fox News last night. Navarro later walked back his comments and said that his comments were taken out of context and, “was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world.”
As we near the end of May, we will put behind us one of the most bullish rallies for the WTI crude oil contract in history with crude jumping almost 75% this month alone. Of course, with WTI prices currently trading at $33.33/barrel, that’s not saying much, as it is widely perceived the breakeven price for domestic crude producers is $32/barrel. The question is: will this rally persist? Let’s review some components to watch out for this summer.
As we enter the end of our winter season in the Northeast, the mild winter combined with global oversupply fears has caused liquefied natural gas (LNG) prices to plummet and the worst may not be over.
On the morning of Monday, January 6, 2020, WTI crude oil was nearing $64/bbl. As of 10:31 a.m. EST on Thursday, February 27, 2020, WTI crude oil was trading at $46.36/bbl. The shocking effects of the coronavirus fear continue to decimate global markets, particularly oil markets. Fortune.com aptly points out that the coronavirus has done to the oil industry what the U.S. and China trade war, strikes on Saudi oilfields, Libyan supply outages, and a near war between the U.S. and Iran-could not. The virus has thrown traders and analysts into complete turmoil.
The sharp decline in oil demand from China due to the coronavirus is causing oil cargoes to be stranded off the country’s coast and across Asia. Last week, OPEC lowered its forecast for global oil demand by nearly a quarter million barrels per day as the pandemic of the coronavirus has crippled fuel consumption in China. Demand from China, the world’s largest importer of oil, has dropped by three million barrels per day which is twenty percent of Chinese consumption.