Oil prices plunged below $ 50! Under the epidemic, the oil industry meets new challenges

By the afternoon of February 4, 2020, there were 20,515 confirmed cases of new-type coronavirus pneumonia in China, and 3,233 new confirmed cases yesterday, a new high.
The epidemic prevention and control work has entered a critical climax period.
The people of the whole country are waiting for it, and they are united to fight against the epidemic.

01. Under the epidemic, China's crude oil demand has plummeted


Affected by the epidemic, China ’s crude oil demand has plummeted, which has led to a sharp drop in international oil prices.

According to data released by the China Petroleum Economics and Technology Research Institute, China's apparent oil consumption in 2019 is about 660 million tons, and the annual net oil import volume is about 500 million tons, a year-on-year increase of 7%, and the oil dependence on foreign countries has reached 70.8%.
As the world ’s largest oil importer and consumer, China ’s oil consumption has been deeply tied to global oil supplies, and any changes in it will have a huge impact on the global energy market.
For today's situation, the sharp decline in China's crude oil consumption has begun to take shape.
As we all know, transportation has always been the top priority of oil consumption.
Affected by a new coronavirus-infected pneumonia epidemic, multiple modes of transportation have been greatly curbed in the near future.
According to the news from the Ministry of Transport, during the 10-day Spring Festival holiday, it is estimated that the country's railways, roads, waterways and civil aviation will send a total of 190 million passengers, a decrease of nearly 73% compared with the same period last year.
Among them, 31.12 million were railways, down 67%, 150 million were roads, down 73%, 2.78 million were waterways, down 80%, and 8 million were civil aviation, down 57%.
And this trend will continue.
According to surveys, most provinces in China currently extend the Spring Festival holiday to February 9, and even some provinces extend the evening shift to 13th.
In response to the epidemic situation and the delay of holidays, measures taken to close cities and villages in various places have led to the stagnation of intercity buses, buses, and private cars.
During this particular period, demand for oil declined sharply.
According to Bloomberg News on the 3rd, China consumes about 14 million barrels of oil per day, which is equivalent to the combined demand of France, Germany, Italy, Spain, the United Kingdom, Japan and South Korea. During the development of the epidemic, China's oil demand may decrease by about 3 million barrels per day, accounting for 20% of total consumption.
And the decrease in demand directly leads to the accumulation of inventory.
According to the latest data from the United States Energy Information Administration (EIA), as of the week of January 24, US crude oil inventories increased by 3.548 million barrels, Cushing crude oil inventories increased by 758,000 barrels, and gasoline inventories increased by 1.203 million barrels, a 12-week increase and continued Record new highs.
Looking at the domestic situation is not optimistic.
Taking Shandong, a major refining and chemical province, as an example, statistics from consulting agencies indicate that gasoline inventories of enterprises in the region are 52.71%, an increase of 34.92 percentage points compared with the pre-holiday period, and diesel inventories are 50.03%, an increase of 29.41 percentage points.
Gasoline and diesel inventories have exceeded warning stocks since 2019, and have reached a new high in one year, and are about double the average inventory level in 2019.
It is worth noting that it is still unknown when the epidemic situation will be effectively controlled. If it lasts too long, it will have a significant impact on refined oil consumption, and oil prices may continue to stay low for a period of time.