Wrap – Week Ended 1/24/20



Panic.  Not advice, we don't do that. But panic was the story of last week.

For oil, the coronavirus impact is unknown but negative and traders more often than not hit the sell button in uncertain times when demand is in question. Even with over 1.5 mm bopd of incremental unplanned outages (Libya, Kazakhstan, Nigeria, Iraq) arriving at the same time (far more than any disruption from a new virus could be, historically speaking) they just sell.   Also note that we've recently swung towards the upper end of the range of longs vs shorts for non commercials and often at that point, only a little news is needed to push prices rapidly in either direction.  We don't pretend to know the ultimate impact of the virus on travel but for now it would appears well discounted and likely to keep a lid on any names who might of been thinking about $55+ type budget. It also is more than likely to prompt OPEC+ to extend their curtailments well beyond March.

For natural gas the lack of a real winter has driven prices rapidly lower, and has emboldened the shorts (see graph below the Wrap table). As noted in a number recent posts, we've seen poor winters before, and while production growth is already falling (curtailments are behind this) and demand is rising (exports, generation and industrial), this will, for a time be masked by the storage levels and smaller than average withdrawals.  Spring and summer are now set for record gas-fired demand, record exports, and ebbing production (even the EIA STEO has natural gas demand ebbing after 1Q20).


Free stuff this week:


Questions and comments will be addressed in the Monday Post.


The Blotter is updated.


Need to contact us? Send us a note at  zman@zmansenergybrain.com



9 Responses to “Wrap – Week Ended 1/24/20”

  1. 1
    Baylor Says:

    We had Ebola back in 2015 or so which didn’t seem nearly as communicable as people thought

    Curious how this one plays out. Seems much more sensationalized than SARS back in 2003

  2. 2
    james T Says:

    re1 Baylor I left you a response friday last post.

  3. 3
    Baylor Says:

    Thanks JamesT

  4. 4
    zman Says:

    WTI $52.50 at futures open

    DJIA off 300

    Lot of panic underway, local doc offices have signs up saying they are screening all patients for coronavirus.

  5. 5
    zman Says:

    Saudi says OPEC+ has ability to flex to meet lower demand from virus.

  6. 6
    zman Says:

    Of five rockets fired tonight, three rockets in direct hit on US embassy in Iraqi capital, including one on cafeteria: security sourc

  7. 7
    Baylor Says:

    Oil with a $52 handle


  8. 8
    Baylor Says:

    I’ll probably move the 401k to sidelines tomorrow while this plays out

  9. 9
    Michael Says:

    Kobe’s death might have something to do with oil going down. Why not?

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