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Opec to discuss coronavirus as Chinese oil demand slumps – business live | Business

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A degree of calm has returned to world stock markets, after the coronavirus outbreak in southern China sparked heavy selling last week. In China, the Shanghai composite closed 1.34% higher while the Shenzhen share index rose 1.8% after the People’s Bank of China acted to stabilise markets. Hong Kong’s Hang Seng rose 1.23% while Japan’s Nikkei gained 0.49%. European stock markets are also expected to rise at the open.

Officials from the world’s largest oil producers are meeting in Vienna, the headquarters of the Opec oil cartel, today and tomorrow to discuss the sharp slide in the crude oil price following the coronavirus outbreak.

Technical experts from Opec and its allies, including Russia, will be there (a group known as Opec+). They will discuss whether to hold an emergency meeting at ministerial level in mid-February, bringing forward a meeting scheduled for early March. Further production cuts are on the agenda, of 500,000 barrels a day.

The New York Times reported that energy ministers could consider a bigger cut of up to 1m barrels a day – or 1% of world supplies.

China is the world’s biggest oil importer and fuel consumption appears to have plummeted by as much as 20%, with travel curbs in place and cities quarantined, Bloomberg reported. It said Chinese oil demand has dropped by about 3m barrels a day – probably the biggest demand shock in the oil market since the financial crisis of 2008/9.

Brent crude, the global benchmark, is trading at $54.60 a barrel this morning while US crude is at $50.5, after falling below $50 yesterday.

Neil Wilson, chief market analyst at Markets.com, says oil is in a “proper bear market” now after the latest steep falls.


What initially was thought to be a temporary hit to the market now looks demand destruction proper. This kind of oil demand shock has not been seen for over a decade. The longer the lockdown in China and travel restrictions globally the greater the impact. OPEC and allies are worried and are bringing forward the March meeting to this month.

There is talk of OPEC+ adding 500,000 barrels per day to cuts of 1.8m bpd, but they’re just getting crushed by this market. Too much uncertainty to see a turn yet – traders are getting burned trying to call the bottom.

The Agenda

  • 9:30am GMT: UK Construction PMI
  • 10am GMT: Eurozone producer prices (December)
  • 3pm GMT: US Durable goods and factory orders (December)