How coronavirus is crushing the oil and gas market

The coronavirus outbreak in China and its spread around the world is crushing the oil and gas market. Oil is down a fifth and liquefied natural gas has fallen to record lows, putting producers in a jam while bringing price relief and buying opportunities for many consumers such as India. Sanjeev Choudhary delves deeper.

CRUDE TAKES A KNOCK

Crude oil is at $55 a barrel, down 20% ($13) since Jan 7, when Chinese authorities announced the coronavirus outbreak.

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NATURAL GAS AT NEW LOWS

LNG prices in Asia have sunk to below $3/mmBtu as China rejects shipments, forcing traders to look for other markets.

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WHAT’S AHEAD

JP Morgan sees crude at average $60.40 per barrel in 2020, down $4.1 from its previous forecast. OPEC, Russia and allies discussing production cut of 600,000 barrels per day. Prices have stabilised for now.

DOMESTIC FUEL PRICES DOWN RS 3 PER LITRE SINCE JAN 7; LIKELY TO FALL FURTHER

Petrol Prices In Delhi (Rs/litre)

Domestic rates are the 15-day moving average of international rates.

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Diesel Prices In Delhi (Rs/litre)

Prices may fall further to fully reflect current decline in international rates.

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GAINS FOR INDIA

1. Cheaper crude will help current account deficit, rupee & inflation.

2. Consumer spends on fuel to fall, leaving more money in hand.

3. Refiners can quietly raise fuel prices to recover the investments made for BS-VI upgrade.

4. Fuel subsidies expected to decline.

5. Govt can raise duties to boost revenue.

6. LNG terminal operators can store cheap gas now and sell later.

7. Marketers can look for more customers as gas becomes cheaper.