The narrative today is that we are facing a global pandemic due to the coronavirus outbreak. It’s absolutely crushing equity and oil markets with the Dow Jones Industrial Average down 980 points and WTI crude oil down $2.75/barrel – and it could get worse.
Over the weekend, the coronavirus infections expanded further outside of China with the spread in Italy and South Korea being the most troubling. According to Reuters, the outbreak has spread to 29 countries and territories with Italy having 150 infections and South Korea up to 833 infections and growing. Italy has sealed off towns and South Korea has increased its coronavirus alert to the highest level. Since this outbreak is spreading so fast to the rest of the world and we still haven’t found a way to quarantine it, much less design a vaccination, economic markets are in sell-now and ask questions later mode.
This begs the question: where do we go from here? We can only go off of the information we have which is: the disease is spreading to other continents; we do not have it quarantined and we do not have a cure. This means we have uncertainty and markets do not like that, especially when it comes to oil demand. Until we can contain this virus and cure it, the sellers will be in charge. However, in the fuel industry, we must be opportunistic in fast market conditions and make decisions that benefit us in the future. If you are a fuel buyer and we are close to a price level you would like to have in the future, please contact your Guttman Energy representative here so you can be opportunistic in this market.
