FxWirePro: WTI Crude Halts At 18-Years Lows Upon Contraction In Global Demand

WTI crude price has tumbled to $19.29 levels which is 18-years lows, from the last couple of days the energy commodity has been oscillating around this price level.

Technically, crude's price consolidation looks vulnerable, no traces of recovery is observed after stern bearish candles, as both leading oscillators (RSI & Stochastic curves) substantiate intensified selling momentum, the trend indicators also substantiate the current downtrend.

The high-frequency demand data point to 7 mbd contraction in global oil demand in March

We update our high-frequency demand indicators. Closing the week, our model is tracking an almost 7 mbd contraction in global oil demand in March. 

Our economists previously assumed that Euro-area activity would bottom 15% below its normal level in March and April. The incoming data from Italy this week, where activity troughed at around 80% of the pre-epidemic levels, supported the view.

However, yesterday the French statistics office suggested industrial activity in the country is running 52% below normal this week based on information obtained from industry representatives at the branch level. The construction sector has been hit very hard, with activity collapsing to 89% below normal levels this week. The French government instituted a national lockdown on March 17, but unlike Italy, the authorities opted to keep the factories operating. The statistics imply that the hit to industrial activity has been extremely large (French statistics office estimates huge 35% hit to activity this week, Brun- Aguerre, 26 March 2020). This compares to the 60% utilization reached by China at the bottom of its massive quarantine imposed in the first two weeks of February. 

Adjusting for lower industrial activity in France, our model is now tracking a contraction in global industrial demand of 273 kbd in March and 1.4 mbd in April. 

Global air traffic this week is tracking 60% below last year’s levels. We peg the loss to global jet fuel demand at 2.2 mbd in March, followed by 3.3 mbd in April. Courtesy: JPM