Coronavirus Blues

01/22/2020 10:42 am EST

Focus: ENERGY

Phil Flynn

Senior Energy Analyst, The PRICE Futures Group

The threat of a major outbreak in China and beyond could significantly curve travel, writes Phil Flynn.

Crude oil markets got hit with a case of the coronavirus blues but may get a boost from the promise made to Maria Bartiromo of a middle-class tax cut.

The trade is trying to gauge the potential for oil demand destruction if fears about the spread of the virus increase. Fox News reported, “At least one person in the United States is infected with the mysterious pneumonia-like virus that’s killed at least six people and sickened some 300 others since the illness was first reported in the Chinese city of Wuhan. Oil traders have good reason to worry because after the Sars virus, we saw a significant drop in oil demand. People did not fly and stayed home fearing the infectious disease. Of course, that was then and this is now. Already China, unlike in 2003, is sharing information giving hope that the World Health Organizations can stay ahead of the spread of the virus.

Oil prices dipped after reports of a U.S. case of the disease yet are now coming back after President Trump said that things surrounding the illness are under control. The Financial Times wrote that, “Hong Kong officials said mainland authorities had found no “definitive” evidence of human-to-human transmission of the virus but could not rule it out.” That statement came a day after the World Health Organization said: “Preliminary investigations conducted by the authorities have found no clear evidence of human-to-human transmission of the novel coronavirus identified in Wuhan. There has been no evidence [even] of limited human-to-human transmission.” This makes the Wuhan outbreak different so far from the 2003 Sars epidemic, which spread from patients to medical staff and eventually killed more than 800 people, mostly in China. according to the FT.

President Trump told Fox Business network’s Maria Bartiromo on that a tax cut is coming. President Reuters reported that President Trump also told Maria that he was thinking of imposing 25% tariffs on cars from the European Union, if a deal was not struck. "Ultimately, it will be very easy because if we can't make a deal, we'll have to put 25% tariffs on their cars," Trump told Fox Business' Maria Bartiromo at the World Economic Forum in Davos, Switzerland.

Oil traders also get the holiday delayed American Petroleum Institute report. The focus will be on products that have seen incredible increases in supply.

Natural gas plummeted. Winter is over as far as natural gas is concerned.

Trade strategy may be key to ride out the crazy moves that will come with the headlines so keep in touch with our daily analysis. Makes sure you are getting my Daily Trade Levels! Read Phil’s energy report at Price Futures Group. Twitter: @energyphilflynn | Facebook: Phil Flynn

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