Daily Energy Report
Crude Oil Futures for April 2020 settled down $1.53 @ $49.90/bbl trading in a $2.33 range including the overnight-RBOB settled down 7.67/cpg and Heating Oil settled down 4.47/cpg.
Oil futures endured a drop of almost -4.0% on Monday and an additional -3.0% Tuesday as the spread of COVID-19 outside China currently underlines concerns about a potential hit to crude demand. According to market advisors, the fear is we will see more demand destruction and turn what was a very tight global oil market-into an oversupplied market. Spot month NYMEX traded WTI futures fell $1.95/bbl. or nearly -3.7% alone to settle at $51.43/bbl on Monday, while Brent crude lost $2.20, or -3.8%, to end the session at $56.30 /bbl. on ICE Futures Europe. The drop in oil is accompanied by a selloff in global equities and other assets perceived as risky, triggered by the rise in the number of COVID-19 cases outside of China.
Natural Gas Futures for March 2020 settled up $0.020 @ $1.847/mmbtu trading in a .043 cent range including the overnight session.
Despite its impressive production capacity, the UAE remains strongly dependent on imported natural gas to meet its domestic demand. A third of the country’s gas is provided by neighboring Qatar-via the Dolphin pipeline. The tense political relations between Qatar and the UAE-due to the UAE support of the Saudi led blockade-create an awkward commercial relationship. Therefore, the discovery of a massive gas field on the border of Dubai and Abu Dhabi could become a significant game changer. Becoming self-sufficient improves the country’s energy security and potentially transforms the regional geopolitical environment.