Oil market suffers from coronavirus

Published on: 06-Feb-2020
Category: Trading
Last updated: 06-Feb-2020

Oil market suffers from coronavirus

As part of the first trade agreement between China and the United States, the People's Republic has now also lowered the first tariffs. $ 75 billion in goods are eligible for the exemption. Punitive tariffs have also been lifted on the US side.

The Chinese economy has been severely affected by the spread of the novel corona virus and has suffered from falling market prices in recent days. The tariff reductions mainly affect agricultural products such as corn, soybeans, meat and fruit. Since most of these goods are imported from the United States, the Chinese government and economy are benefiting from the first agreement between the two largest economies.

The current virus threat in China and the precautions that have been adopted also affect the oil market. The price of Brent North Sea rose to $ 56.53 a barrel at the start of trading. The price for the light oil grade WTI was also raised. Opec + members are currently advising in Vienna on a reduction in production of 600,000 barrels per day. It is questionable whether the states will agree on this, as Saudi Arabia has kept its production at its lowest level in six years.

The reduction in production is said to bring stability as prices have fallen sharply in China due to the corona virus. Many factories were closed and flight connections by international airlines were discontinued. According to experts, demand should have fallen by up to 25 percent. Global oil demand could see a 0.5 percent decline in 2020. According to media reports, the extremely low demand in China is said to be the biggest cut in the oil market since the financial crisis of 2008/2009.


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