OIL trades as if the virus is a 1 quarter event. As if it's Containable, Reversible and Temporary. Is it ?

[BLA + 1,666]

Nobody knows.  

There are signs Japan might become a virus hotspot.  

Financial analyst are now projecting Chinese Q1 GDP of 4%.  They assume China bounces back in the second quarter after the disapation of the virus..  A 4% GDP is like a recession for China.  

Today China has initiated strong measures to boost the economy.  It has sent oil prices higher.  Whether this is permanant or not remains to be seen . 

The virus in about a month has disrupted the whole world shipping industry. It's not just Chinese oil imports. For example there are shipments of Beef, Pork and Chicken piling up at the ports.  They can't find enough truck drivers.  

International shipping rates are dropping. 

China is reporting some positive virus data but you can't trust the Chinese.  WHO (World Health Organization) has finally been let into China.  The U.S. CDC has-been stopped even though they have the top viral scientists in the world.

Let's hope the virus is Containable, Reversible and Temporary.

We will know by April or May

However, IF the virus stays strong I believe there will be a major CAPITULATION in Oil prices and Oil Company stocks in APRIL or MAY.  This would present the best buying opportunity for Oil stocks in the last decade. I may even be tempted to by an oil company stock for the first time in 3 years. 

Edited February 19, 2020 by BLA

[Gerry Maddoux + 3,627]

Well, on a positive note, spring is coming. With it come nature's finest antivirals: sunshine, heat, humidity. 

And a vaccine should be on the way soon. The viruses' glycoprotein spicules mutate regularly. However, any conferred immunity would probably take an illness from a mortality to the morbidity column. 

This virus kills hosts with already-damaged lungs: smokers and those working in high industrial pollution areas. You can bet that this has dawned on the Chinese. Hopefully, they'll wage a campaign to clean up air pollution. My presumption is that the thousands of tiny coal-burning utility plants will go away, and that LNG will become a bigger deal. 

Actually, it's time for the US to offer China a hand: End the trade war quickly. Use cheap LNG as a carrot. No matter what one thinks of the CCP, the Chinese people have been physically and psychologically hammered. I think Mr. Trump has it in him to offer that hand; he has shown such a trait before (called Iran's embarrassing shooting down of a passenger jet a "tragic mistake").  

[Geoff Guenther + 317]

6 hours ago, BLA said:

Financial analyst are now projecting Chinese Q1 GDP of 4%.  They assume China bounces back in the second quarter after the disapation of the virus..  A 4% GDP is like a recession for China.  

It's hard to believe that locking down half of China would only decrease Q1 GDP by a couple of percent, but who am I do disagree with bankers?

As for Q2 and the world economy. The current epidemic can go one of two ways. We successfully contain it, which we find out in the next month, or it goes worldwide. Containment means that things can get back to normal for most people, but with heightened caution.

If it goes worldwide, though, it might be less damaging to the world economy than the current Chinese containment. Yes, lots of people could be off with flu-like symptoms for a week, but traders are betting this is less harmful than the dreaded Spanish flu scenarios.

[Ward Smith + 6,615]

As @0R0 has aptly demonstrated, China simply lies about their GDP (probably the US does a bit, but one is in the multiple percentage points and the other might be tenths of a point). So if they claim 4%, it could well be anywhere from 2% to -4% or more. We don't even have to accuse the upper CCP of lying, it would likely be all the functionaries lower in the food chain of the CCP claiming wonderful productivity increases in their regions while staring at pure red ink. Because, communism. The USSR taught us how this game comes out. 

[Gerry Maddoux + 3,627]

2 hours ago, Geoff Guenther said:

If it goes worldwide, though, it might be less damaging to the world economy than the current Chinese containment. Yes, lots of people could be off with flu-like symptoms for a week, but traders are betting this is less harmful than the dreaded Spanish flu scenarios.

Well, that truly was a pandemic. It is estimated that it killed about a 100 million, which seems amazing to me to this day.

As you may well know, the Spanish flu or flu of 1918, was caused by a zoonotic virus that jumped from birds to humans. Genes of that virus "stuck" in the DNA of some of those patients. Not the whole viral genome, of course, just pieces. Actually, in every person's DNA are portions of old viruses. How those influence general health isn't completely known.

I have always thought the Avian flu of 1918 to be one that mostly attacked damaged lungs--like those of smokers. It hit the veterans of WWI the hardest, and ones with lungs damaged by phosgene hardest of all. When I was a medical student in the late sixties, I used to ask all Parkisonian patients if they were survivors of the Spanish flu, and had they been smokers. The answers were yes/yes in a troubling number. 

A smart young fellow at UT has generated a protein from the glycoprotein spicule that is particularly appealing for a vaccine. This might even be a partially effective vaccine for all coronaviruses. That would reassure a worried world.

 

[ronwagn + 6,290]

10 hours ago, Gerry Maddoux said:

Well, on a positive note, spring is coming. With it come nature's finest antivirals: sunshine, heat, humidity. 

And a vaccine should be on the way soon. The viruses' glycoprotein spicules mutate regularly. However, any conferred immunity would probably take an illness from a mortality to the morbidity column. 

This virus kills hosts with already-damaged lungs: smokers and those working in high industrial pollution areas. You can bet that this has dawned on the Chinese. Hopefully, they'll wage a campaign to clean up air pollution. My presumption is that the thousands of tiny coal-burning utility plants will go away, and that LNG will become a bigger deal. 

Actually, it's time for the US to offer China a hand: End the trade war quickly. Use cheap LNG as a carrot. No matter what one thinks of the CCP, the Chinese people have been physically and psychologically hammered. I think Mr. Trump has it in him to offer that hand; he has shown such a trait before (called Iran's embarrassing shooting down of a passenger jet a "tragic mistake").  

We need to use all possible ways of targeting communications to the general population of China. They need to be very aware of the lung health factors you mentioned and how  LNG could help China use less coal. 

[0R0 + 6,251]

I think everyone is accepting the numbers about the rate of new cases dropping rapidly these past two weeks. I will believe it when they release more folks from lockdown. 

The opening of Macau is good news and a positive indicator..

On the other hand, as someone pointed out, they can't even get truckers to the ports to pick up urgently needed meats. When they release millions rather than thousands at a go, I would expect it to be really over. 

At the moment, WHO is allowed in finally, but not allowed to go to Wuhan. So what's the point?

I don't believe the IEA estimates hold water. It is simply not true. Half your people are in quarantine for a 3rd week and you are just 0.5% down in oil imports? just not so.