The mood on the oil market was subdued this week as both benchmarks declined.
American inventories were down slightly and concerns of slowing demand weighed on investor sentiment.
The general economic news has been buoyant since the beginning of the year but the recent outbreak of the coronavirus in China is spreading fears of lower fuel demand.
The death toll hit 26 this week bringing concerns that people will reduce travel and movement and this will have a knock on impact on fuel and energy demand.
The World Health Organisation has declared an emergency in China but not on a global scale despite some cases in other countries.
Parts of China are on lockdown, with public transportation shut, restricting movement of people in several towns.
Airport travel in and out of Chinese cities is being impacted with international screenings being enforced.
US crude stocks decline
US crude stocks declined last week by more than 400,000 barrels according to the Energy Information Administration putting American oil inventories about 2 percent below the 5-year average at just over 428 million barrels.
Gasoline stocks hit an all-time high, up by 1.7 million barrels to 260 million barrels.
American oil imports continue to decline averaging around 6.4 million barrels a day, with American production currently around 13 million barrels a week.
Global, political and corporate leaders spent the week in Davos, Switzerland at the World Economic Forum where climate change was the key focus.
Environmentalists call for withdrawal of investments
Environmentalists called for a complete withdrawal of investment in fossil fuels and a commitment to a greener future.
Activist Greta Thunberg shrugged off efforts and sentiment from politicians and executives saying how they “need to start listening to the science and treat this crisis with the importance it deserves.”
No-one is disagreeing, but the US Secretary of the Treasury, Steve Mnuchin said that this was just one of the world’s biggest problems.
The CEO of Occidental, Vicki Hollub said the oil and gas industry is changing saying, “we are not only fighting for our industry’s life but fighting for people to understand the things we are doing.”
Libya oil supplies blocked
Libyan oil supplies were prevented from leaving the country this week as all key ports and some pipelines were blockaded.
Military leader Khalifa Haftar ignored calls from the US and allies to reach a peaceful agreement for the country as he continues his fight with the UN backed Government of National Accord.
The chairman of the National Oil Corporation, Mustafa Sanalla declared a “force majeure” to all customers and said the country’s oil production was not like “cards to be played to solve political matters.”
In a statement on the company website he added that if fields are shut, the production loss will be immediate.
“We have limited available storage at our main ports. If they are closed, we will need to reduce production immediately and to shut down entirely when available storage is filled.”
He cautioned that because of this limited storage capacity, this situation could happen in as little as five days.
The shut-down of all fields would mean a loss of 1.2 million barrels a day and as much as US$77 million in revenue.
Stronger growth anticipated
As we close January, the oil market will look back on a volatile month but will look forward in anticipation of stronger growth.
Earlier this week, investment bank Barclays said it reviewed its global oil demand oil outlook and adjusted it upwards to 1.4 million barrels a day.
This is the type of positive sentiment oil producers like to hear as they look ahead to 2020.