China's recent air pollution levels may be telling a story about the coronavirus impact on its economy
https://www.cnbc.com/2020/02/24/coronavirus-chinas-air-pollution-levels-smog-show-hit-to-the-economy.html
- using air pollution levels as a gauge of industrial activity
- pollution levels actually BETTER now than they were 5 years ago
- satellite photos show that barges of coking coal (used for steel production) sitting unused.

Saudis Weigh Breaking Oil Alliance With Russia as Virus Crimps Demand
https://www.wsj.com/articles/saudis-weigh-break-with-russia-over-response-to-coronavirus-11582293904?redirect=amp#click=https://t.co/OoGWIMzltL
- is the #bromance over?
- China and Russia becoming closer trading partners. Huawei is the main Russian supplier of 5G, pipeline.
- Russia-China relationship is more important to Russia than its relationship with Saudi Arabia
- Saudis may be trying to leverage what it can to pressure Russia into agreeing to cut oil production

Teck Pulls Oil Project, Blames Canada’s Climate-Policy Uncertainty
https://www.wsj.com/articles/teck-pulls-oil-project-blames-canadas-climate-policy-uncertainty-11582522432
- uncertainty like this is ruling the market and causing a lot of volatility

API Monthly Statistical Report with Dr. Dean Foreman
https://www.api.org/~/media/Files/News/2020/02/Monthly_Statistical_Report_January_2020.pdf
Coronavirus market takeaways
- dominating headlines and price action
- impact especially in refined products
- will need to look at more data to see full global impact
- expected drop in U.S. Petroleum demand. 2%-3% growth in jet fuel demand disappeared in January
- IMO 2020 also affected demand but in unexpected ways
- production side: very well supplied market. With demand shock from the virus, getting price shock that we are seeing
- despite less drilling hitting oil and natural gas records
- by the time we hit the 4th quarter growth is down to 900,000 bpd, may also see a contraction in gasoline demand by 4th quarter
- Coronavirus is not a pandemic and isn’t as bad as SARS in terms of fatalities. It can have a bad economic impact and bad human impact but at this point it doesn’t look as bad as SARS.
- From a supply perspective, we’ve basically balanced the global oil market. But now Coronavirus is disturbing the equilibrium
- From a financial standpoint and an industry standpoint, there is an argument for OPEC to cut production at its next meeting.
- Will Coronavirus impact Americans’ vacation plans? For example, will people not choose cruise ships because of a fear of getting quarantined.
- Historical impact of election season on oil market - API study on trillions of dollars of negative impact of bans of different flavors on fracking. Within a year could hit triple digit prices and could stay there for a decade.
- US was a net importer of petroleum for January but this looks to be a short

Come watch Ellen at the Cato Institute next week on March 4 on a panel discussing “The Iran Crisis and American Energy Security”
Link to register or watch online here: https://www.cato.org/events/the-iran-crisis-and-american-energy-security

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