Coronavirus and Energy Demand
Coronavirus is not new. First described in the 1960s, it is actually a family of viruses known for containing strains that cause potentially deadly diseases in mammals and birds. This latest strain first appeared in people who visited a seafood and animal market in the Chinese city of Wuhan in 2019. It is still unclear what type of animal the initiator of the virus came into contact with, but like other Coronavirus strains, after making the hop from animal to human, it has spread by coming into contact with fluid droplets issuing from someone who is infected.
The virus in the U.S.
As of February 18, there are 29 confirmed cases of the virus in the United States. However, 14 of these are Americans who were evacuated from the quarantined Diamond Princess cruise ship docked outside of Japan. The remaining cases include eight in California, two in Illinois, and one each in Washington, Arizona, Massachusetts, Wisconsin and Texas. According to the CDC, the average American’s risk of contracting the virus is very low at this time. The symptoms are fever, cough and difficulty breathing. For those with the virus, there is no known treatment. Not unlike the flu, those infected can only treat the symptoms and get lots of rest.
The virus in China
Around 2,000 people are reported to have died from the virus in mainland China. Their Vice Premier Sun Chunlan has said city officials should go door to door to check resident’s temperatures. “Set up a 24-hour duty system,” he said. “During these wartime conditions, there must be no deserters, or they will be nailed to the pillar of historical shame forever.” The virus has brought the Chinese economy to a virtual standstill since the outbreak. They are importing and consuming less oil and gas, flying fewer planes, and running fewer factories. Their oil demand is estimated to have fallen by about a third.
As the second-largest economy, Chinese demand helps determine international oil and gas prices. This is where a tipping point for Coronavirus and Energy Demand may start. It is predicted that global demand will drop by 4% this month, or roughly 4 million barrels a day. Some of the lost demand will be made up later in the year, but since there is already a surplus it is a blow to the market. This comes at a bad time for President Trump’s trade deal with China. Beijing made it clear that if market demand was not there, then neither would their buying binge be there.
It is now a waiting game to see if or how much the virus continues to spread.