The crude oil market is still coming back from the coronavirus sell-off as Libyan exports continue to zap global supply, and Venezuelan exports will stop moving as the U.S. hits Russia’s Rosneft trading unit sanctions.
Other things are going on in the oil market other than demand destruction from the coronavirus. Oil is shaking off coronavirus fears and focusing on threats to supply, and geopolitical risks as Brent crude has rallied seven days in a row.
Oil Prices are giving up gains and turned lower after Apple will miss its second-quarter forecast for revenue. They pointed to supply issues for iPhones and lower sales in China as the coronavirus shut down factories and stores.
Markets are back on the defensive after a risk-on day. The main reason is the numbers game. The number of reported cases of the novel coronavirus (Covid-19) said from China, that is. China, because of a new way of counting.
Oil funds started to pile on to the short side of crude after more than a 20% drop as they all of a sudden realized that we saw oil demand destruction of historic nature. Today Goldman Sachs downgraded China’s GDP growth forecast to 5.2% from 5.8%.
Oil is coming back in a classic turnaround Tuesday fashion as the market is starting to realize that a 22% correction in the price might be a fair assessment of the demand destruction created by the coronavirus so far.
So much for the "emergency” OPEC plus meeting. The cartel can’t seem to get Russia to believe there is an oil oversupply emergency even after a 22% price correction in response to demand destruction created by the coronavirus.